Product Management - 15 Sep 09

8/9/2019 Product Management - 15 Sep 09

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Introduction to Prod. Mgt.Introduction to Prod. Mgt.

Product Management System.Product Management System.

Product Manager.Product Manager.


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Product Management SystemProduct Management System

Started By P&G in 1920 for CAMAYStarted By P&G in 1920 for CAMAY

Common Across All IndustriesCommon Across All Industries

Portfolio of productsPortfolio of products


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General Org. ChartGeneral Org. ChartHead of company /.division / country

Manufacturing Marketing Finance

Head MarketingNew BusinessDevelopment

Marketing research

Category 1Group Product Manager

Category 2Group Product Manager

Product mgr 1

Product Mgr 2

Product mgr 3


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PMS v/s General MarketingPMS v/s General Marketing

managementmanagement

ProductProductmanagementmanagement

General MarketingGeneral Marketing

ManagementManagement

Scope ofScope ofResponsibilityResponsibility Narrow : SingleNarrow : SingleProduct or a productProduct or a productLineLine

Broad : Portfolio OfBroad : Portfolio OfProductsProducts

Nature OfNature Ofdecisiondecision

makingmaking

Mainly TacticalMainly Tactical Mainly strategicMainly strategic

Time HorizonTime Horizon Short run ( QuarterShort run ( Quarteron quarter oron quarter ormaximum annual )maximum annual )

Long Run ( KeepingLong Run ( KeepingVision & Mission InVision & Mission InFocus)Focus)


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The PMS system can beThe PMS system can be

successfullsuccessfull1)1) If the system is adapted to theIf the system is adapted to the

situationsituation

2)2) Assign appropriate role for theAssign appropriate role for thePMPM

3)3) Appropriately QualifiedAppropriately Qualified

4)4) Support from top managementSupport from top management

5)5) Realistic ExpectationsRealistic Expectations


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THE PRODUCT MANAGERTHE PRODUCT MANAGER

All this while the pm was only seenAll this while the pm was only seenas a facilitator or a coordinator oras a facilitator or a coordinator or

perhaps doing work of an assistantperhaps doing work of an assistantor a secretaryor a secretary

But the modern PM is much more.But the modern PM is much more.


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The Effective Product ManagerThe Effective Product Manager


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Product Manager Interface.Product Manager Interface.

Top Management :Top Management : Objectives & GuidanceObjectives & Guidance

Design & Engineering :Design & Engineering : Prod.DevelopmentProd.Development

Production :Production : Mfging & Forecasting TargetsMfging & Forecasting Targets

Sales & Mktg :Sales & Mktg : Mktg plans / strategies /Mktg plans / strategies /

PromotionsPromotionsLegal Dept :Legal Dept : Contracts / Packing Slips / PackContracts / Packing Slips / Pack

DetailsDetailsFinance :Finance : ROI & BudgetsROI & Budgets..


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Critical Skill SetCritical Skill Set

Team workTeam work

Communication SkillsCommunication Skills

Analytical Abilities.Analytical Abilities.


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L.2L.2

NEW PRODUCT PLANNEW PRODUCT PLAN


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Reasons to develop new productsReasons to develop new products

Market Share.Market Share.

Diversification.Diversification.

Spare capacity.Spare capacity.

Synergy.Synergy.

Product width .Product width .

Beat Competition.Beat Competition.


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Product Feasibility.Product Feasibility.

Product Development.Product Development.

Test Marketing.Test Marketing.

Commercial Launch.Commercial Launch.


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Developing The Product PlanDeveloping The Product Plan ..

Market ResearchMarket Research

a) category attractivenessa) category attractiveness

b) Customerb) Customer

c) Competitionc) Competition


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Marketing Style.Marketing Style.

a) Mass Marketing

b) Segment marketing

c) Niche Marketingd) Local Marketing

e) Individual Marketing


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Factors of AttractivenessFactors of Attractiveness

Category SizeCategory Size

Market GrowthMarket Growth

Product Life CycleProduct Life Cycle

SeasonalitySeasonality

ProfitabilityProfitability


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Product Life CycleProduct Life Cycle


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PLCPLCIntroduction PhaseIntroduction Phase

CCategory could be small.ategory could be small.

Growth of category & sale is smallGrowth of category & sale is small

Expenditure is high.Expenditure is high.

Growth PhaseGrowth Phase

Category size is moderateCategory size is moderate

Consistent growth in sale & size of categoryConsistent growth in sale & size of category

Expense curve is on decline or constant.Expense curve is on decline or constant.


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MaturityMaturity

Category size is now largeCategory size is now large

Growth is slowGrowth is slow

sales figures not constant , may varysales figures not constant , may vary

DeclineDecline

Category size is moderateCategory size is moderate

Growth of category is negativeGrowth of category is negative

Sales are lowering and attractiveness ofSales are lowering and attractiveness ofof category is lowof category is low


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Marketing Strategies Through PLCMarketing Strategies Through PLCIntroduction Stage.Introduction Stage.

1) Rapid Skimming1) Rapid Skimming High Price , High Promo,High Price , High Promo,Build Brand, mkt unawareBuild Brand, mkt unaware

2) Slow Skimming2) Slow Skimming ---- High Price , Low Promo,High Price , Low Promo,Ltd Mkt, Mkt aware.Ltd Mkt, Mkt aware.

3) Rapid Penetration3) Rapid Penetration Low Price, High Promo,Low Price, High Promo,Large mkt, price sensitiveLarge mkt, price sensitiveeconomies of large scale.economies of large scale.

4) Slow Penetration4) Slow Penetration Low Price, Low Promo, mktLow Price, Low Promo, mktawareness, someawareness, somecompetition.competition.


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Growth Stage.Growth Stage.

1) New Products1) New Products

2) Enter New Segments2) Enter New Segments

3) Improve distribution3) Improve distribution


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Maturity stage.Maturity stage.

1) Convert non users1) Convert non users

2) New market Segments2) New market Segments

3) More frequent use3) More frequent use

4) New uses.4) New uses.


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Decline StageDecline Stage

1) Strong & Fit will last1) Strong & Fit will last2) Harvesting2) Harvesting

3) Increase Investment3) Increase Investment

4) Divesting4) Divesting


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Threat of new EntrantsThreat of new Entrants

Economies of scaleEconomies of scale ------ RelianceReliance

Prod. DifferentiationProd. Differentiation ------ KellogsKellogs

Capital RequirementsCapital Requirements ------ InfyosisInfyosis

Switching CostsSwitching Costs ------ Microsoft network toMicrosoft network to

oracle networkoracle network

HOME LOANSHOME LOANS

Distribution Network.Distribution Network.


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Threat OF SubstitutesThreat OF Substitutes

Petrol Cars v/s Electric CarsPetrol Cars v/s Electric Cars

Trains v/s Low Cost AirlinesTrains v/s Low Cost Airlines

Cell Phones v/s LandlinesCell Phones v/s Landlines


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Environment AnalysisEnvironment Analysis

Economical FactorsEconomical Factors

Technological FactorsTechnological Factors

Political FactorsPolitical Factors

Regulatory FactorsRegulatory Factors

Social FactorsSocial Factors


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Customer AnalysisCustomer Analysis

Who Buys &Who uses the ProductWho Buys &Who uses the Product

1)1) InitiatorInitiator

2)2) InfluencerInfluencer

3)3) DeciderDecider

4)4) PurchaserPurchaser

5)5) UserUser


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Adoption process.Adoption process.

Early adoptersEarly adopters

MajorityMajority

LaggardsLaggards


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What does the customer buy &HowWhat does the customer buy &Howthey use it?they use it?

1)1) Consumer buying not the product but theConsumer buying not the product but thebenefit.benefit.

2)2) R F M concept helps to create data.R F M concept helps to create data.


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Where customers buy from?Where customers buy from?

a) Road sidea) Road sideb) Kinnara storeb) Kinnara store

c) On phonec) On phone

d) Departmental Store / Mallsd) Departmental Store / Mallse) Catalogue Shoppinge) Catalogue Shopping


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When do customers buy?When do customers buy?

How do customers choose theHow do customers choose theproductproduct


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Why customers prefer one prod overWhy customers prefer one prod overthe other?the other?

a) Functionalitya) Functionalityb) Affordabilityb) Affordability

c) Ego / Affluence.c) Ego / Affluence.

Will they buy it again?Will they buy it again?


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SegmentationSegmentation--TargetingTargeting--PositioningPositioning

SegmentationSegmentation Identify & Profile theIdentify & Profile themarket you want to cater to & Themarket you want to cater to & TheProducts you want to offer.Products you want to offer.

TargetingTargeting Choose the Segment &Choose the Segment &the Product.the Product.


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Procedure for segmentation.Procedure for segmentation.

1)1) Conduct a Survey across theConduct a Survey across theMarket.Market.

2) Analyze the Data collected.2) Analyze the Data collected.

3) Profile the groups.3) Profile the groups.


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SegmentationSegmentation Customer basedCustomer based

1)1) Geographic locationGeographic location

2)2) DemographicDemographic

3)3) Psychographic SegmentationPsychographic Segmentation

4)4) Behavioral SegmentationBehavioral Segmentation


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Market Targeting.Market Targeting.

Evaluate the segmentsEvaluate the segments

One segment strategy.One segment strategy.

Multi segment strategy.Multi segment strategy.

One product for allOne product for all


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Competitive Analysis L.3Competitive Analysis L.3


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Slow Growth of MarketsSlow Growth of Markets

Short PLCShort PLC

Low Sales GrowthLow Sales Growth

Pressure on MarginsPressure on Margins


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Imp Qs Such As :Imp Qs Such As :Who are the major competitors?Who are the major competitors?

How do the competing products / services stackHow do the competing products / services stackup against each other?up against each other?

What are the main objectives of the competitor?What are the main objectives of the competitor?

What is the current strategy?What is the current strategy?

Who has the competitive edge?Who has the competitive edge?

What are they likely to do in the future?What are they likely to do in the future?


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Types of CompetitionTypes of Competition

Monopoly ::Monopoly :: one co.high price, serviceone co.high price, service

not priority , little advtg.not priority , little advtg.

Oligopoly ::Oligopoly :: few cos in the marketfew cos in the market

Same product / serviceSame product / service

theme , concentration ontheme , concentration on

differentiation , pricedifferentiation , price

sensitive to competitionsensitive to competition

Eg. Maruti &HuyundaiEg. Maruti &Huyundai


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Types of competitionTypes of competition

Monopolistic Competition ::Monopolistic Competition ::

Many players each offering something uniqueMany players each offering something unique

eg. Restaurants : italian udipi chineseeg. Restaurants : italian udipi chinese

Difference on basis of segmentation.Difference on basis of segmentation.

Pure Competition ::Pure Competition ::

Many players , same product , same service ,Many players , same product , same service ,emphasis on low cost of production . / distribution .emphasis on low cost of production . / distribution .


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Objectives of competitionObjectives of competition

Based on things like ::Based on things like ::sizesize

historyhistory

current managementcurrent management

financial situationfinancial situation

place in large organization & in productplace in large organization & in product

portfolioportfolio


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Market Share ::Market Share ::

various promo schemes.various promo schemes.DiscountsDiscounts

Reducing PriceReducing Price

Piggy Back OffersPiggy Back Offers

Profit Motive : :Profit Motive : :

Consistent PricingConsistent Pricing

Consistent Promotional ExpenseConsistent Promotional Expense

Rational BehaviourRational Behaviour


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Sources of InformationSources of InformationSecondarySecondary::

Local News papersLocal News papers

Annual reportsAnnual reports

General business publicationGeneral business publication

Trade JournalsTrade Journals

Promotional LiteraturePromotional Literature

Trade AssociationsTrade Associations

InternetInternet


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Sources Of InformationSources Of InformationPrimary:Primary:

Sales Force

Customers

Employees

Suppliers

Employee Pinching

Reverse engineering

Monitoring the test markets.


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Assessing Competitor s CurrentAssessing Competitor s Current

StrategyStrategy

Marketing StrategyMarketing Strategy

Value Chain AnalysisValue Chain Analysis

Marketing Mix.Marketing Mix.


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Marketing StrategyMarketing Strategy

Different Segments That the competition is catering to.Different Segments That the competition is catering to.

Brand Extensions / Product extensionsBrand Extensions / Product extensions

Which segment is the most profitable and easiest to enterWhich segment is the most profitable and easiest to enter

U.S.PU.S.P differential matrixdifferential matrix

Service Packaging and delivery termsService Packaging and delivery terms

3variable tests:: share of market3variable tests:: share of market

share of mindshare of mind

share of heart.share of heart.


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Comparing Value ChainsComparing Value Chains

Strategic Cost Analysis :Strategic Cost Analysis :

Focus On cost of

a)a) Raw Material CostRaw Material Cost

b) Cost of Productionb) Cost of Production

c) Cost of Promotionc) Cost of Promotion

d) Cost paid by ultimate customerd) Cost paid by ultimate customer


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Comparative value chain analysis::Comparative value chain analysis::

1)1) Breakdown activities/Business ProcessBreakdown activities/Business Process

eg. Designing ,eg. Designing ,manufacturing,manufacturing,marketing ,marketing ,Distributing,Distributing,After sales service.After sales service.

2)2) Primary ActivityPrimary Activity::

a) Inbound logistics :a) Inbound logistics : raw material flow , ware housing and materialraw material flow , ware housing and materialhandling.handling.

b) Operations :b) Operations : Turning inputs into final product.Turning inputs into final product.c) Outbond Logistics :c) Outbond Logistics : order processing & Distribution.order processing & Distribution.d)d) Commercial Pricing & channel Mgt along with brand bldg activity.Commercial Pricing & channel Mgt along with brand bldg activity.e) Service :e) Service :Delivery in time , Installation , complaint Handling , repairs and partsDelivery in time , Installation , complaint Handling , repairs and parts

Eg:Eg: A/c & Electric Chimney : separate charges for installation & demoA/c & Electric Chimney : separate charges for installation & demo

: Installation and demo for washing machine and tv is included in the MRP: Installation and demo for washing machine and tv is included in the MRP


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Secondary & Support ActivitiesSecondary & Support Activities

a)a) Procurement :Procurement :

Procedure for procurement collectingProcedure for procurement collectingData , analysing data for decision making.Data , analysing data for decision making.eg: Hll packnet , ERP softwares ,eg: Hll packnet , ERP softwares ,

cross category meets.cross category meets.

b) Technology Development :b) Technology Development :

Designing and implementing proceduresDesigning and implementing procedures

Improving design and utility , Reducing timeImproving design and utility , Reducing timeTo produce there by saving on cost orTo produce there by saving on cost orImproving margins.Improving margins.

c) HRM ::c) HRM ::

Hiring , trainning , compensation , incentivesHiring , trainning , compensation , incentives

Gen infrastructure , general management , govt. relations , finance.Gen infrastructure , general management , govt. relations , finance.


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Value chain AnalysisValue chain Analysis

Upstream :Upstream :

cost and margin of suppliers ,cost and margin of suppliers ,

processes followed,processes followed,balance of qlty and cost.balance of qlty and cost.

Down Stream :Down Stream :cost and margin of distribution &cost and margin of distribution &strategic partners and channel alliesstrategic partners and channel allies


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Differential Advantage MatrixDifferential Advantage Matrix

&&

SWOT ANALYISSWOT ANALYIS


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PORTER 5 FORCE MODELPORTER 5 FORCE MODEL


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Competing SellersCompeting Sellers

Most Powerful ForceMost Powerful Force

Check Rivalry StatusCheck Rivalry Status

Price / Quality/Features/ ServicePrice / Quality/Features/ Service

Dealer networkDealer network

Warranty / GuaranteeWarranty / Guarantee

Innovation.Innovation.


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Potential EntrantsPotential Entrants# Seriousness Of Threat Depends On# Seriousness Of Threat Depends On

Barriers to entryBarriers to entry

Capital Investment RELIANCECapital Investment RELIANCE

Economies of scale RELIANCEEconomies of scale RELIANCE

Specialized Technology RELIANCESpecialized Technology RELIANCE

Customer Loyalty Almost monopolisedCustomer Loyalty Almost monopolised

Distribution ChannelsDistribution Channels

Regulatory Policies Political network to changeRegulatory Policies Political network to change


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Substitute ProductsSubstitute Products

You can say this force is strong whenYou can say this force is strong when

These products have better featuresThese products have better features

Profits Are IncreasingProfits Are Increasing

Newer capacities are being addedNewer capacities are being added

Attractively priced.Attractively priced.

Eg Petrol / Lpg / Cng. / Electronic VehiclesEg Petrol / Lpg / Cng. / Electronic Vehicles


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Suppliers.Suppliers.The stronger they are the more often pricesThe stronger they are the more often pricesfluctuate delivery times are erratic.fluctuate delivery times are erratic.

Few in no.Few in no.

Few substitutesFew substitutes

Not an imp. CustomerNot an imp. Customer

High switching costHigh switching cost

Threat to forward integrationThreat to forward integration


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BuyersBuyers

Buyers are anyways important to satisfy but theyBuyers are anyways important to satisfy but theyare particularly strong whenare particularly strong when

They are large and consume in bulkThey are large and consume in bulk

Have multiple suppliersHave multiple suppliers

No cost or effort in switching over to substituteNo cost or effort in switching over to substitute

Have capacity to integrate backward.Have capacity to integrate backward.


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L 4L 4

Product StrategyProduct Strategy


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Where are we going to go?Where are we going to go?

How will we get there?How will we get there?

What will we do?What will we do?


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Strategy needs to be in place before startingStrategy needs to be in place before starting

a)a) Achieve Co ordinationAchieve Co ordination

b)b) Allocation Of ResourcesAllocation Of Resources

c)c) Should lead to a superior market positionShould lead to a superior market position

d)d) Do everything that competition is not doing :Do everything that competition is not doing :untouchedsegment , alternateuntouchedsegment , alternate

channels to sell /distribute.channels to sell /distribute.e) Choose something that competition can not do:

Patents intechnologyandpharma.Patents intechnologyandpharma.

f) If competition should get into your business it should beof advantage to you :

IncreaseinconsumptionIncreaseinconsumptionIncreaseincategoryIncreaseincategory


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Steps to Product StrategySteps to Product Strategy

Vision & Mission of strategyVision & Mission of strategy

* largest player in category by .* largest player in category by .

* Increase Portfolio size with allied products.* Increase Portfolio size with allied products.

* Offer premium product at a premium price.* Offer premium product at a premium price.

Selection of strategic Alternative:Selection of strategic Alternative:Mfg :* Reduce inputMfg :* Reduce input

* milk existing infrastructure* milk existing infrastructure

* Increase output by adding one more shift* Increase output by adding one more shift

* long run of one prod assembly* long run of one prod assembly

Mktg : * Convert non usersMktg : * Convert non users

* Enter new markets* Enter new markets -- -- internationalinternational

* Appeal to different segments* Appeal to different segments toyota qualistoyota qualis


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Targetting & PositioningTargetting & Positioning

** Choice of customers:Choice of customers:

a)a) Identify the customer base.Identify the customer base.

b)b) Identify the segment / base of customers thatIdentify the segment / base of customers thatwould help in growth.would help in growth.

c)c) For faster and higher profits it would makeFor faster and higher profits it would makesense to take advantage of the existingsense to take advantage of the existingcustomer / existing segmentcustomer / existing segment -- non user.non user.


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** Choice of CompetitionChoice of Competition

Are u a leader , challenger , nicherAre u a leader , challenger , nicher

Leader Strategies:Leader Strategies:

Expand total market demmandExpand total market demmand--find new users , new uses , increase consumptionfind new users , new uses , increase consumption

Defend market shareDefend market share

Increase market shareIncrease market share

Continuous innovationContinuous innovation

Hold on to dealer shelf spaceHold on to dealer shelf space

Packs in all sizes and varietiesPacks in all sizes and varieties

Develop a super market intelligence / PR.networkDevelop a super market intelligence / PR.network

Preemptive defense:Preemptive defense: attack before comp. attacksattack before comp. attacks

Counter offensive defense:Counter offensive defense: React with equal or stronger attack.React with equal or stronger attack.

Do not under estimate the COMPETITIONDo not under estimate the COMPETITION


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b) Strategies for Challenger:b) Strategies for Challenger:

Challenger has the opportunity to attack upward or under.Challenger has the opportunity to attack upward or under.

Frontal AttackFrontal Attack : Attack the strength of the leader: Attack the strength of the leadercompetes with ad. Aggressiveness , prod. Features ,competes with ad. Aggressiveness , prod. Features ,functionality with equal or lower price.functionality with equal or lower price.

Flank attackFlank attack: Attack the enemy on the weak points: Attack the enemy on the weak points ------

weak segmentweak segmentweak territoryweak territoryuncovered marketsuncovered markets

Jap carsJap cars more fuel efficient than american guzzlersmore fuel efficient than american guzzlers

Encirclement AttackEncirclement Attack: Attack from all sides: Attack from all sides strengths ,strengths ,

weaknessweakness ---- utility , price , fashion , status , conviniance ,utility , price , fashion , status , conviniance ,availabilityavailability


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c) Strategies for Market Follower:c) Strategies for Market Follower:

Product imitation rather than innovationProduct imitation rather than innovation

CloningCloning : Exact replicate: Exact replicate

ImmitatorImmitator : Same type like the leaders: Same type like the leadersproduct , but slight difference in packagingproduct , but slight difference in packaging, appeal ,pricing , color ,design., appeal ,pricing , color ,design.

AdaptorAdaptor : Copies the leader but improves: Copies the leader but improveson certain areason certain areas

d) S t i f Ni hd) S t i f Ni h


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d) Srategies for Nichers:d) Srategies for Nichers:

Catch a particular niche and grow in itCatch a particular niche and grow in it --------ENFIELDENFIELD

Specialist in end useSpecialist in end use

Geographic speacilistGeographic speacilist

Product / product line specialistProduct / product line specialist

Quality and price SpecialistQuality and price Specialist

Made to order specialist.Made to order specialist.


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T & PT & P the core Strategythe core StrategyPrice sensitive.Price sensitive.

Non price Sensitive.Non price Sensitive.

Based on the strategyBased on the strategy -- the product has to convince the customer of the value that itthe product has to convince the customer of the value that itis offering..is offering..

Low cost airline : comfortable & cheap , on time arrivalLow cost airline : comfortable & cheap , on time arrival& departure.& departure.

DECCANAIRLINESDECCANAIRLINES------ SUCCESSFULSUCCESSFUL

5 star hotel : luxury & prestige5 star hotel : luxury & prestigeCENTAURHOTELSCENTAURHOTELS ------ Un successful.Un successful.

Laptops : Reliable computing and QualityLaptops : Reliable computing and Qualityat a cost advantageat a cost advantage

LENNOVO : un SuccessfulLENNOVO : un Successful


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Price StrategyPrice StrategyLow cost advantage ::::Low cost advantage ::::

Economies of scale :Economies of scale : One Product , long runOne Product , long runproduction.production.

Value Chain Analysis :Value Chain Analysis : Critical activities analysis ,Critical activities analysis ,cut corners.cut corners.

HR. Function :

HR. Function :

Cut no. of positions that are not core /Cut no. of positions that are not core /

staff perks,incentives ,properties /officestaff perks,incentives ,properties /office

spacespace


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Non Price Strategy.Non Price Strategy.Expected ProductExpected Product

Augmented ProductAugmented Product

Potential Product.Potential Product.

Convenience & ServiceConvenience & Service

Distribution Channel.Distribution Channel.

Working on the concept of customerWorking on the concept of customerDelight.Delight.


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Differentiation on the basis of :Differentiation on the basis of :

Quality :kingfisher v/s Jet v/s Air IndiaQuality :kingfisher v/s Jet v/s Air India

Status & Image : Evian v/s BisleriStatus & Image : Evian v/s Bisleri

Creating Brand Equity : cadburrysCreating Brand Equity : cadburrys

Mc. DonaldsMc. Donalds

BMWBMW

NestleNestle


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Marketing Mix:Marketing Mix:Product : design , utility . Functionality ,reliability ,Product : design , utility . Functionality ,reliability ,

warranty.warranty.

Price : competitive , justify value , credit terms cost ofPrice : competitive , justify value , credit terms cost ofadvertising / sellingadvertising / selling

Promotion : Advtg , sales promotion , brand bldgPromotion : Advtg , sales promotion , brand bldg

Place : territory , location , inventory , transport , coveragePlace : territory , location , inventory , transport , coverage

Packaging :design , utility , promotion , protection , cost.Packaging :design , utility , promotion , protection , cost.

People : Team building , retention , motivation, right man forPeople : Team building , retention , motivation, right man forthe right job , training , recruitment.the right job , training , recruitment.

BCG AnalysisBCG Analysis


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BCG Analysis.BCG Analysis.


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L 5.L 5.

BRANDINGBRANDINGPROMOTION AND PRPROMOTION AND PR


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Branding.Branding.

Brand is a promise to the customerBrand is a promise to the customerfrom the manufacturer for deliveringfrom the manufacturer for deliveringa specific set of features, quality,a specific set of features, quality,benefits,& services.benefits,& services.


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WHY DO BRANDING WHEN THERE ISWHY DO BRANDING WHEN THERE ISA HUGE COST INVOLVED?A HUGE COST INVOLVED?


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DifferentiationDifferentiation

Segment MarketsSegment Markets

Corporate ImageCorporate Image

Legal Protection of prod FeaturesLegal Protection of prod Features

Attract & Retain customers.Attract & Retain customers.


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Brand ParityBrand Parity

Price SensitivePrice Sensitive

Equally Good Quality competitor ProductsEqually Good Quality competitor Products

Reduced Advtg. ExpenditureReduced Advtg. Expenditure

Brand & Line ExtensionBrand & Line Extension

In store Brands.In store Brands.


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Brand StrategyBrand Strategy

Line ExtensionLine Extension Same Product CategorySame Product Category

New Variants.New Variants.

Brand ExtensionBrand Extension Same BrandSame Brand new prod.new prod.categorycategory

Multi BrandsMulti Brands Same Prod. CategorySame Prod. Category

multiple brands.multiple brands.

Co. BrandingCo. Branding ----


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BRAND REPOSITIONING.BRAND REPOSITIONING.

BRAND ASSOCIATIONBRAND ASSOCIATION


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Identifying the Audience.Identifying the Audience.

Demographic & Psychographic ProfileDemographic & Psychographic Profile

* Literacy / Education* Literacy / Education

* Life Style* Life Style

* Geographic Location* Geographic Location

Awareness of Product / Brand /Awareness of Product / Brand /Company.Company.

M di P fM di P f


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Media PreferenceMedia Preference

* Electronic Media* Electronic Media -- -- Satellite TelevisionSatellite TelevisionCable TelevisionCable Television

RadioRadio

Internet.Internet.* Print Media* Print Media -- -- News PapersNews Papers

Magazines / TradeMagazines / TradeJournalsJournals

* Display Media* Display Media -- -- Bill boards / Signs /Bill boards / Signs /postersposters

Objective Of CommunicationObjective Of Communication


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Objective Of CommunicationObjective Of Communication

A.I.D.A. ConceptA.I.D.A. Concept

AwarenessAwareness

InterestInterest

DesireDesire

ActionAction


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Ultimately the Message.Ultimately the Message.

Message ContentMessage Content

RationalRational -- Plain FactPlain Fact -- Industrial ProductsIndustrial Products

EmotionalEmotional-- Humor / Fear (Amul /Humor / Fear (Amul /

insurance)insurance)

Ethical / MoralEthical / Moral Less Used in every dayLess Used in every day

Products.Products.

BUYING MOTIVESBUYING MOTIVES


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BUYING MOTIVESBUYING MOTIVES

Maslows TheoryMaslows Theory

Psychological NeedsPsychological Needs( coper T, Polio , thermal ware)

Safety NeedsSafety Needs ( Bajaj Allianz , Saffola)

Esteem NeedsEsteem Needs ( Digjam , Onida , Tanishq)

Self Actualization Needs.Self Actualization Needs. ( Nakshatra , Alcohol , Cigarettes )


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ADVERTISNG / PUBLICITYADVERTISNG / PUBLICITYPaid Form of PromotionPaid Form of Promotion

Always Positive ResultAlways Positive Result

Planned effort to initiatePlanned effort to initiate

or maintain relationor maintain relationbetween product / brandbetween product / brand

customer / consumer.customer / consumer.

Marketer has moreMarketer has morecontrol over advertisingcontrol over advertising

Not always paid formNot always paid form

May be negative resultMay be negative result

Planned Effort toPlanned Effort toinitiate & maintaininitiate & maintainrelation betweenrelation between

organization &organization &

environmentenvironment

Marketers has lesserMarketers has lessercontrol over publicity.control over publicity.

Advertising / Personal SellingAdvertising / Personal Selling


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Communication withCommunication with

many customer /many customer /consumer in one shotconsumer in one shot

Non personal form ofNon personal form ofpromotionpromotion

Use of mass media toUse of mass media toappeal to targetappeal to targetaudienceaudience

Used for productsUsed for productswith mass consumerwith mass consumerbasebase

HP rinters.HP rinters.

Communication on aCommunication on a

one on one basisone on one basis

Extreme personalExtreme personal

form of promotionform of promotion

Used for productsUsed for productsmade to fit for amade to fit for aparticular need (particular need (Machine / soft ware )Machine / soft ware )

HP plottersHP plotters

Advertising / Personal SellingAdvertising / Personal Selling


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Advertising / Sales PromotionAdvertising / Sales Promotion

In the present no extraIn the present no extrabenefit apart frombenefit apart fromcommunicating thecommunicating themessage & givingmessage & giving

information to consumerinformation to consumer

Advertising is recurringAdvertising is recurring

Long Term ApproachLong Term Approachwaiting for benefits occur.waiting for benefits occur.

Immediate extraImmediate extrabenefit to consumer bybenefit to consumer byway of free gifts orway of free gifts ordiscounts.discounts.

Non recurring inNon recurring innaturenature

Short term approachShort term approachand immediateand immediateresponse in terms of aresponse in terms of asalesale

Ad ti i / P bli R l tiAd ti i / P bli R l ti


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Advertising / Public Relations.Advertising / Public Relations.Object is to persuade inObject is to persuade inorder to sellorder to sell

Promotes relationship withPromotes relationship withbrand / productbrand / product

through consumptionthrough consumption

Aimed at distributors &Aimed at distributors &consumers / customersconsumers / customers

Used only for PromotionUsed only for Promotion

Object is to inform / educateObject is to inform / educate

Promotes relationship throughPromotes relationship throughhuman elementhuman element

Aimed at every link in theAimed at every link in thechain right from thechain right from theemployees / production unit /employees / production unit /suppliers / distributors /suppliers / distributors /customers & share holderscustomers & share holders

Used for creating mutualUsed for creating mutualunderstanding ( take care ofunderstanding ( take care offaulty product / bad logistics /faulty product / bad logistics /depressed share value.depressed share value.


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Budgeting MethodsBudgeting Methods

Affordability methodAffordability method

Percentage of sales methodPercentage of sales method

Competitive methodCompetitive method

Objective & task methodObjective & task method


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PR. Its. Meaning & Importance.PR. Its. Meaning & Importance.

Full form of PR.Full form of PR. ------------Public RelationsPublic Relations

Advertising creates intent toAdvertising creates intent topurchase and generate sale ,purchase and generate sale ,Function of PR. is to educate.Function of PR. is to educate.

PR. Is a quality of strong and goodPR. Is a quality of strong and goodrelationship.relationship.


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Discover the current image of theDiscover the current image of thecompany.company.

How good is the after market service?How good is the after market service?

Creditable AdvertisingCreditable Advertising

Industrial RelationsIndustrial Relations

Trade relationsTrade relationsPackagingPackaging AlAlmn foil carton with perforation formn foil carton with perforation for

cutting to sizecutting to size

PremisesPremises

How does the stock market treat you?How does the stock market treat you?

How you deal with correspondence?How you deal with correspondence? Nestle everyNestle everyday whitenerday whitener


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Situations in which PR is ImportantSituations in which PR is Important

1) Prejudice1) Prejudice eg. Hindu/ muslim vendors ,eg. Hindu/ muslim vendors ,chinese prod.chinese prod.

2) Ignorance2) Ignorance eg.worli sea inkeg.worli sea ink koli fishingkoli fishingcommunitycommunity

3) Hostiltity eg.3) Hostiltity eg.Vibgyor school v/s parentsVibgyor school v/s parents


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Corporate identityCorporate identity

Is different from image.Is different from image.

Consistent and focused approach forConsistent and focused approach for

establishing an identity.establishing an identity.

It is time consuming and expensive toIt is time consuming and expensive to

design a corporate identity scheme anddesign a corporate identity scheme andthen consistentlythen consistently

implement it in all physicalimplement it in all physicalrepresentationrepresentation

Common approaches to establishCommon approaches to establish


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Common approaches to establishCommon approaches to establish

identity.identity.

1) Logo Type1) Logo Type Cadburrys , Ford , BataCadburrys , Ford , Bata

2) Colour2) Colour ------ Kodak Film boxKodak Film box

Fuji Film BoxFuji Film Box

3) Charecterisation3) Charecterisation ------ prancing horseprancing horse

lion headlion head

charging bullcharging bull

4) Slogan4) Slogan ------ BMW: ultimate drivingBMW: ultimate drivingmachinemachine


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PR.& MarketingPR.& Marketing

Company Name / Brand Name..Company Name / Brand Name..( Axis , Canara)( Axis , Canara)

PackagingPackaging ( Recognition / Retail display )( Recognition / Retail display )

PricingPricing ( 99 syndrome )( 99 syndrome )

AdvertisingAdvertising ( hertz , porche , volks wagon )( hertz , porche , volks wagon )

Sales PromotionSales Promotion ( Long term , Short term)( Long term , Short term)


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9999

PR. Customer RelationPR. Customer Relation

After Sales ServiceAfter Sales Service

Maintaining Customer InterestMaintaining Customer Interest ( Scorpio ,( Scorpio ,Minawala Jewellers , Satguru Art Gallery, Tata Indigo Events , )Minawala Jewellers , Satguru Art Gallery, Tata Indigo Events , )

Loyalty Programmes / memberships /Loyalty Programmes / memberships /

BrochureBrochure

Translations / culture research / TradeTranslations / culture research / Tradecommission.commission.


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Pr & CrisisPr & Crisis

Identify Potential risksIdentify Potential risks

SupplementH

. R. PractiseSupplementH

. R. Practise

Lateral & Vertical CommunicationLateral & Vertical Communication

Product Recall.Product Recall.


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P i Obj tiP i Obj ti


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Price ObjectivesPrice Objectives

SurvivalSurvival

Maximize Sales ( Hll / P&G)Maximize Sales ( Hll / P&G)

Maximize ProfitsMaximize Profits

Market Skimming ( Cell phone , DupontMarket Skimming ( Cell phone , Dupont

Prod.Quality Leadership(MercProd.Quality Leadership(Merc--Toyota,siemens)Toyota,siemens)

Non Profit PricingNon Profit Pricing

El ti it f D dEl ti it f D d


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Elasticity of Demand.Elasticity of Demand.

Demmand Inversely Proportionate toDemmand Inversely Proportionate toPrice.Price.

UNLESSUNLESS

No SubstitutesNo SubstitutesSlow ChangeSlow Change

Justified Rise ( Quality , inflation)Justified Rise ( Quality , inflation)

ILL InformedILL InformedUnique EffectUnique Effect

Shared CostsShared Costs

InventoryInventory

Mkt MiMkt Mi P iP i


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Mktg. MixMktg. Mix ------------ PricePrice

Average Quality ProductAverage Quality Product

with large advtg. Budgetwith large advtg. Budget

and good availability === HIGHand good availability === HIGHPRICEPRICE

Good Quality withGood Quality with

large Advtg Budgetlarge Advtg Budget

Big / known brand === HighBig / known brand === HighPricePrice

P i iP i i


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PricingPricing

Uniform PriceUniform Price

Discriminatory priceDiscriminatory price

Market Based PriceMarket Based Price

Cost BasedCost Based

Dumping ******Dumping ******

GRAY MARKET *******GRAY MARKET *******


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Different Pricing TechniquesDifferent Pricing Techniques

1) C t Pl / M k U1) C t Pl / M k U


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1) Cost Plus / Mark Up.1) Cost Plus / Mark Up.Cost per Unit = Variable cost + Fixed CostCost per Unit = Variable cost + Fixed Cost

----------------------------------------------------------estimated demand of unitsestimated demand of units

Mark up price = unit costMark up price = unit cost--------------------------------------

( 1( 1 desired return of sales )desired return of sales )

+ve. Side+ve. Side ------ helps to determine costhelps to determine costFair to buyer & sellerFair to buyer & sellerAll firms using same costing thus no war.All firms using same costing thus no war.

-- ve. Sideve. Side------ If Demand analysis wrongIf Demand analysis wrong

If Price point set is wrongIf Price point set is wrong

2) Target Ret rn Pricing2) Target Ret rn Pricing


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2)Target Return Pricing2)Target Return Pricing

Return On investmentReturn On investment

Unit Cost + ( Desired rate of return x Invested Capital )Unit Cost + ( Desired rate of return x Invested Capital )

----------------------------------------------------------------------------------------------

Unit SalesUnit Sales

Break Even Volume = FIXED COSTSBreak Even Volume = FIXED COSTS

------------------------------------------------------------

PricePrice -------- Variable CostVariable Cost


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3) Perceived Value3) Perceived Value (Heart Surgeon(Heart Surgeon

designer clothes)designer clothes)

4)Going rate in Market4)Going rate in Market

5) Value for Money ( Air deccan5) Value for Money ( Air deccan

Indigo /Esteem)Indigo /Esteem)

6)Going Rate Pricing6)Going Rate Pricing

Price DiscountsPrice Discounts


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Price Discounts.Price Discounts.

Cash DiscountCash Discount

Qty.DiscountQty.Discount

Seasonal DiscountSeasonal DiscountCash RebatesCash Rebates

Low interest FinancingLow interest Financing

Longer Warranty and ServiceLonger Warranty and ServiceContractsContracts

Psychological Discounting.Psychological Discounting.

Price ChangesPrice Changes


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Price ChangesPrice Changes

Price Cuts :Price Cuts :

Price IncreasePrice Increase

Customer reactionCustomer reaction

Competitor ReactionCompetitor Reaction


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L. 7L. 7

Mrkt Potential / Sales Fore cast.Mrkt Potential / Sales Fore cast.

Potential : Maximum sales that are attainablePotential : Maximum sales that are attainable


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Potential : Maximum sales that are attainablePotential : Maximum sales that are attainableunder given set of conditions with in aunder given set of conditions with in a

specified period of time.specified period of time.

Forecast : Sales expected to be achieved under aForecast : Sales expected to be achieved under aset of conditions with in a specifiedset of conditions with in a specifiedperiod of time.period of time.

Quota : What is expected by a certain deptQuota : What is expected by a certain dept

or sales person to be achievedor sales person to be achieved


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Market PotentialMarket PotentialHard to estimate accurately the upper or lower limitHard to estimate accurately the upper or lower limit

Still important because:Still important because:

1) Entry exit decisions1) Entry exit decisions

2) Resource level decisions2) Resource level decisions

3)3) Location decisionsLocation decisions

4)4) Set objectives and evaluate decisionsSet objectives and evaluate decisions

5) As an input5) As an input benchmark for FORECASTbenchmark for FORECAST


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Sources of informationSources of information

Past sales dataPast sales data

Govt. sourcesGovt. sources

Trade AssociationsTrade Associations

Private companiesPrivate companies

Financial & Industrial AnalystsFinancial & Industrial Analysts

PressPressInternetInternet


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Estimate market & sales PotentialEstimate market & sales Potential

1)1) Analysis based :Analysis based :

Determine potential buyers / usersDetermine potential buyers / users

a)a) Determine RequirmentDetermine Requirment

b)b) Determine needDetermine needc)c) Determine abilityDetermine ability

E ti t th h i / U tE ti t th h i / U t


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Estimate the purchasing / Usage rateEstimate the purchasing / Usage rate

**** Potential users**** Potential users

xx

Potential Usage RatePotential Usage Rate


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Area PotentialArea Potential

a)a) PopulationPopulation

b)b) Retail salesRetail sales

c)c) Disposable IncomeDisposable Income

Attach weights to get accurate answer.Attach weights to get accurate answer.

0.20 x % of population of area compared to whole india0.20 x % of population of area compared to whole india

+ 0.30 x % of retail sales of area of india+ 0.30 x % of retail sales of area of india

+ 0.50 x % of disp. income of area of total india+ 0.50 x % of disp. income of area of total india


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Sales ForecastsSales Forecasts

Expected level of co. sales based on a chosenExpected level of co. sales based on a chosenmrktg. Plan & assumed mrktg. Envmrktg. Plan & assumed mrktg. Env

Done to estimate:Done to estimate:

1)1) Revenue for the yearRevenue for the year

2)2) Help set the budgetsHelp set the budgets

3)3) Provide basis for monitoring the systemProvide basis for monitoring the system

4)4) Production planningProduction planning5)5) To value a companyTo value a company

4 i bl th t i t t4 i bl th t i t t


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4 variables that are important:4 variables that are important:

a)a) Customer behaviourCustomer behaviour

b) Competitor reaction / actionb) Competitor reaction / action

c) Product strategiesc) Product strategies

d) Environment ( legal , political ,d) Environment ( legal , political ,economical )economical )


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Techniques of Sales ForecastTechniques of Sales Forecast

Judgement based methods:Judgement based methods:

a)a) Nave explorationNave exploration

b)b) Sales force compositeSales force composite

c)c) Jury of expert oppnionJury of expert oppnion

d)d) Delphi MethodDelphi Method

Customer Based Methods:Customer Based Methods:


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Customer Based Methods:Customer Based Methods:

a)a) Market SurveyMarket Survey

b)b) Market Testing and displayMarket Testing and display

Sales Extra Polation Method:Sales Extra Polation Method:


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a) Moving Average: is a populara) Moving Average: is a popularapproach.approach.

SStt = s= stt--11 + s+ stt + s+ st+1t+1

--------------------------------------------

33


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Regression analysisRegression analysis

a)a) Plot sales data over timePlot sales data over time

b) Consider Variables relevant forb) Consider Variables relevant forpredicting salepredicting sale


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L 8L 8

Logistics &Logistics &

Channel ManagementChannel Management

M k t l i ti i l l iM k t l i ti i l l i


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Market logistics involves planning ,Market logistics involves planning ,

implementing, controlling , theimplementing, controlling , thephysical flow of material & finalphysical flow of material & finalgoods , from points of origin togoods , from points of origin topoints of use to meet a customerspoints of use to meet a customers

requirement . AT A PROFIT.requirement . AT A PROFIT.

It requires a detailed study of targetIt requires a detailed study of target

market requirements and thenmarket requirements and thendesigning the supply chain backward.designing the supply chain backward.

L i ti D i iL i ti D i i


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Logistic DecisionsLogistic Decisions

WareHousingWareHousing

Stocking LocationsStocking Locations

Own / leased warehousesOwn / leased warehouses

AutomationAutomation ( softwares , material handling equipment( softwares , material handling equipment ))

Transportation:Transportation:


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Transportation:Transportation:

SpeedSpeed

FrequencyFrequency

DependabilityDependability CapabilityCapability

AvailabilityAvailability

TraceabilityTraceability COSTCOST

Pi b kPi b k


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Piggy backPiggy back

Fishy backFishy back

Train shipTrain ship

Air truckAir truck

Private CarrierPrivate Carrier

Contract CarrierContract Carrier


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INVENTORYINVENTORY

Customer Service level

Re- order point

Order processing cost

v/s Inventory carrying cost

ABC analysisABC analysis


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JIT style.JIT style.

Ch l M tCh l M t


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Channel SelectionChannel Selection

Direct ChannelDirect Channel

Indirect ChannelIndirect Channel

Di t Ch lDi t Ch l


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Direct ChannelDirect Channel

Better than indirect when:Better than indirect when:

Information needs are highInformation needs are high

Product Customization is neededProduct Customization is needed

Quality Assurance MattersQuality Assurance Matters

Purchase orders are largePurchase orders are large

Transportation / storage are complexTransportation / storage are complex

Own StoreOwn Store


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Sales ForceSales Force

Mail / catalogueMail / catalogue

PhonePhone

Trade Shows.Trade Shows.

Internet.Internet.

Indirect ChannelsIndirect Channels


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Indirect ChannelsIndirect Channels

Better Than Direct whenBetter Than Direct when

One stop shopping for prod is impOne stop shopping for prod is imp

Availability is importantAvailability is important

After sales service is importantAfter sales service is important


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S i th t h l idS i th t h l id


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Services that channel can provideServices that channel can provide

Physical DistributionPhysical Distribution

PromotionPromotion

Matching customers to specific needsMatching customers to specific needs

Feed backFeed back



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Contractual ObligationsContractual Obligations

Self InterestSelf Interest

Human ContactHuman Contact

Power ManagementPower Management


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Power ManagementPower ManagementVolume of salesVolume of sales

Brand EquityBrand Equity

Low Switching costLow Switching cost

Backward IntegrationBackward Integration

Invest in technologyInvest in technology

Cut costsCut costs

Support small reatailers.Support small reatailers.


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L.10L.10

Product Mgr. of aProduct Mgr. of a

service Companyservice Company


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A serviceis anyactorperformanceA serviceis anyactorperformancethatone partycanofferto anotherthatone partycanofferto another

thatis essentiallyintangible andthatis essentiallyintangible anddoes notresultintheownership ofdoes notresultintheownership ofanything, its productionmayormayanything, its productionmayormay

notbetiedto a physical product.notbetiedto a physical product.

5 offerings to the customer5 offerings to the customer


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5 offerings to the customer5 offerings to the customer

Pure tangible goodsPure tangible goods

Tangible goods with accompanying servicesTangible goods with accompanying services

HybridHybrid

Majority service along with minor tangiblesMajority service along with minor tangibles

Pure Sevices ( fully Intangible )Pure Sevices ( fully Intangible )

Characteristics of servicesCharacteristics of services


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Characteristics of servicesCharacteristics of services

IntangibilityIntangibility

In seperabilityIn seperability

VariabilityVariability

PerishabilityPerishability


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Differential PricingDifferential Pricing

Non peak DemmandNon peak Demmand

Complimentary servicesComplimentary services

Reservation ServicesReservation Services


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Services to succeed need:Services to succeed need:

1)1) External MarketingExternal Marketing

2)2) Internal MarketingInternal Marketing

3)3) Interactive marketingInteractive marketing

Essentials for a Service company:Essentials for a Service company:


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Essentials for a Service company:Essentials for a Service company:

Competitive DifferentiationCompetitive Differentiation

1)1) OfferOffer

2)2) DeliveryDelivery

3)3) ImageImage

Managing Service QualityManaging Service Quality


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1)1) Gap between Consumer expectationGap between Consumer expectation& Management Perception.& Management Perception.

2) Gap between service quality2) Gap between service qualityspecifications & service delivery.specifications & service delivery.

3) Gap between service delivery and3) Gap between service delivery and

external communication.external communication.

System OrientedSystem Oriented


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System OrientedSystem Oriented

Monitoring Service performanceMonitoring Service performance

Satisfying Customer Complaint.Satisfying Customer Complaint.

Satisfying Employees.Satisfying Employees.


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Post Sale Strategy.Post Sale Strategy.


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Product Management - 15 Sep 09

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Transcript of Product Management - 15 Sep 09