MS 63 Product Management

UNIT 1 Product Management Introduction (familiarizes you with the term product and its related concepts) Product Management Basic Concepts Product Management Product Management is an integral part of marketing function and includes a whole range of activities pertaining to product planning and development and extend itself to brand building and management Project Management An Overview What is a Product?

Anatomy of a ProductAugmented Product Tangible Specifications

Core Benefits

TOTAL PRODUCT CONCEPT / LEVELS OF PRODUCT

AUGMENTED PRODUCT

pre sale warranty

Tangible Specificationfeatures

Core Benefit functionsquality packaging

benefits delivery

brand equity relationships

After sales service

financing

Types of Product Tangible Products Intangible Products Product Classification Based on tangibility durability, intangibility in to durable, non-durable and services respectively Based on ultimate users and their buying behaviour, attitudes, we come across Consumer Products Convenient Product Shopping Product Specialty Product

Product Line and Product Mix Product Line Product Mix and Line Decisions Product Mix Metrics of Product Mix o Helps in defining firms product portfolio based on width, depth and consistency o Appeals to diverse consumer needs across various segments, thus helps in maximizing shelf space and sustain dealer support Line Stretching e.g. maruti Suzuki, esteem, baleno Line filling e.g. Hyundai i10, i20 o aiming for incremental profits o optimal utilization of excess and under utilized capacities o an attempt to offer a full line of the product o in response to dealer complain about lost sales because of missing items on the line

Major Responsibilities of Product Management Functions

Product Management Conceptual Issues Product Line Decisions Product Life Cycle Segmenting, Targeting and Positioning Strategies Branding New Product Development Test Marketing Product Launch Business environment Competition Trade, Industry and other Market Forces etc.

Unit 2 The Product Management Process The Product Management Function

The Product Management Function

The Product Management Function

Product Management Decisions Product Mix Decisions Product innovation/Modernization Decisions Product Line Pruning/Product Elimination/Product Phasing Decisions New Product Decisions/Diversification Decisions Branding and Packaging Decisions

Product Manager s Management System Scope A little general manager or entrepreneur Coordinator of activities performed by others An assistant for the product real managers top management Responsibility Authority Management task Marketing Decisions Budget and Marketing Plans The need for a Product Management System Changing Role of the Product Manager Flexibility in the task assigned to product manager is required under developments

Unit 3 The Product Planning System The traditional Approaches to Product Planning A Matrix Approach to Product Planning Phase A The definition of product The strategic market The relevant measurement instruments Phase B Examination of sales position Phase C The market share of the company

Suggested Marketing Strategy on the basis of the Product Evaluation Matrix Inferences Product Evaluation Matrix Product s Current Position Company sales Industry sales Market-share of the product Profitability

A Model to Add Clarity and System to the Judgment Involved in Product Planning Marketability Durability Productive ability Growth Potential

Unit 4 Product Line Decisions Evaluation of Product Line Bases for Product Line Extensions Customer Segmentations Consumer Desire Pricing Breadth Excess Capacity Short-term Gain Competitive Strategy Trade Pressure

The Disadvantages of Line Extension Weaker Line Logic Lower Brand loyalty Underexploited Idea Stagnant Category Demand Poorer Trade Relations More Competitor Opportunities Increased Costs

Factors Influencing Product Line Decisions Category Size Market Growth Product Life cycle Sales Capacity Seasonality Profits

Category Factors Influencing Product Line Decisions Threat of New Entrants Bargaining Power of Buyers Bargaining Power of Suppliers Current Category Rivalry Pressure from Substitute Category Capacity

Unit 5 Product Life Cycle

Levels of PLC

Different levels of Product Product category A product form a product and a brand

Shapes of PLC Classical bell shaped curve Growth-slump maturity pattern Style Fashion Fad

The Product Life Cycle Concept Introductory stage Growth stage Maturity stage Decline stage PLC An Aid to Product Planning Operationalising the Product Life Cycle Deciding upon the unit of analysis Definition of relevant market Identification of the product stage in the PLC Defining the unit of measurement Determining the time unit

Identification of the product stage in the PLC

PLC As a tool to plan market share strategies Framework suggested PLC as a Guidelines for Marketing Strategy Advertising Product Changes Pricing Distribution

Unit 6 Product Portfolio The portfolio Concept Levels of business unit Served market Timeframe for analysis

The Logic for Portfolio Approach The opportunities for the product/market differ Product inherits different competitive strengths and exploiting opportunities In resource allocation decision for products, the major considerations are opportunity for product growth and profitability The corporate objectives would be decided based on the cumulative opportunities for all the products and competitive strength of these products Based on the corporate and individual product objectives, resources are allocated. However, it is not straightforward process, it involves several interactions based on much involved analysis of sources and uses of resources.

Types of Display Matrix Boston Consulting Group s Growth-Share matrix McKinsey Matrix Strategic Planning Institute s Matrix Arthur D. Little Company s Matrix Hofer s Product/Matrix Evaluation Matrix

Boston Consulting Group s Growth-Share matrix

Boston Consulting Group s Growth-Share matrix

BCG Matrix-Building Procedure Classify various activities of the company into different business segments or strategic business units For each business segment determine the growth rate of the market Compile the assets employed for each business segment and determine the relative size of the business within the company Estimate the relative market shares for the different segments Plot the position of each business segment on a matrix of business growth rate and relative market share

BCG Matrix-Strategic Implications The general strategy of a company with diverse portfolio is: To maintain its competitive position in the cash cows, but avoid over-investing The surplus cash generated by Cash Cows should be invested first in Star businesses, if they are not selfsufficient, to maintain their competitive position Any surplus cash left with the company may be used for selected Question Mark businesses to gain market share for them Those businesses with low market share, and which can not adequately be funded may be considered for disinvestment The Dogs are generally considered as the weak segments of the company with limited or no new investments allocated to them

BCG Matrix-Strategic Implications

BCG Matrix-Portfolio Balancing Strategy Time Dependence

BCG Matrix-Portfolio Balancing Strategy Time Dependence

BCG Matrix-Portfolio Balancing Strategy Time Dependence

Limitation of BCG Matrix Predicting profitability from growth and market share Problems in determining market share Effect of experience ignored Disregard for human aspect Modifications in BCG approach

GE s Strategic Business Planning Grid S.No. Factors 1 2 Typical Weightage

Rate of growth of sales and cyclic 10% nature of business Nature of competition including 15% vulnerability to foreign competition Susceptibility to technological obsolescence and new products Entry conditions and social factors Size of market Profitability Total weightage 15% 10% 10% 40% 100%

3 4 5 6

Factors Determining Competitive Position of the Company as with Market attractiveness S.No. Factor 1 2 3 4 5 6 Market share and capacity Growth rate Weightage Rating (1-10) Score 20% 10% 7 7 5 6 7 8 0.7 0.5 0.9 1.4 1.6 0.4

Location and Distribution 15% Management skill 20% Workforce Harmony Technical excellence including product and process engineering Company image 20% 5%

7

10% Total

81.4

6.9 100%

Factors Determining Competitive Position of the Company as with Market attractiveness

Shells Directional Policy Matrix Directional Policy Matrix Double or quit Phased withdrawal Disinvest

Attractive Sectoral Prospect

Leader Leader Growth Cash Generation Strong

Try Harder

Average

Custodial Phased withdrawal Average

Unattractive

Weak

Units / product competitive Position

PIMS Model (Profit Impact of Market Strategy) Arthur D. Little Company's MatrixDominant Strong Business Strength Favoured Tenable Weak Embryonic Growth Mature

Hold Hold Hold Unacceptable (ROI) Unacceptable (ROI) Unacceptable (ROI) Decline

Industry Product Life Cycle

Embryonic and Growth - Build strategy Mature stage HOLD strategy Decline stage Harvest strategy Maturity / decline stage - unacceptable ROI

Hofer s Product/Market Evaluation Matrix

Utility of Display Matrices

In one form or another most portfolio approaches try to correlate industry growth of profitability with market share, either as a direct single variables of as an index based on multiple variables. In coming years the relevance of portfolio analysis will be much more than in the past.

Unit 7 Product Pricing Relationship of Pricing to the Marketing Mix Product Price Promotion Place / Distribution Packaging

Factors Influencing the Pricing Decisions Objective Other components of marketing mix Product life cycle o Skimming pricing o Penetration pricing Costs o How the cost vary with production

Factors Influencing the Pricing Decisions Economies of Scale

Factors Influencing the Pricing Decisions Competition Pure competition Monopolistic competition Oligopolistic competition, and Pure monopoly

Price Demand Relationships

Other Factors

Types of Pricing Cost-plus pricing Target profit pricing Perceived value pricing Going rate pricing Bid pricing Discounts Cash discounts Quantity bulk discounts Seasonal discounts Trade-in discounts

Discriminatory Pricing Customer-based Product-based Place-based Time-based Strategic Significance of Pricing Competitive edge Optimizing profits Increasing captive consumption

Unit 8 Branding Decisions Branding o a process o a tool o a strategy o an orientation Strategic relevance of branding o serves as a tool to segment the market o starts with an idea o has an enduring value o helps protects innovation o sustains though the product may die o is a living memory

Branding Policy Decisions Manufacturer brand policy Family branding Independent branding Distributors brand policy Mixed brand policy

Brand Name a word with meaning not necessarily related to the product it represent. Amritanjan, Ortem the name of the manufacturers of the product. Nilkamal, Bata a combination of numerical and alphabets. Elle 18, CBZ 150 a word whose meaning suggests some function or quality of the product. Surya, Sleepwel

Brand Name Selection Process Step -1 Preparing checkpoints for the different values to be contained in the name o memorization value o descriptional value o motivational value o repurchase value Step 2 Making a search for name Step -3 Assigning differential ratings to the names formulated Step 4 Quadrivalent analysis for separating names from desirable ones and measuring the marketing potency of the different names Step 5 The final choice

How to Build a Brand Input Identification of key customer groups or segments Understanding customer expectations needs and aspirations Assessing competitive offering including substitutes Building customer confidence by Total brand management both hardware and software aspects Outcome Market share New customer attracted Customer loyalty index Increased profitability Brand knowledge Assessment Continuous feedback from customers as well as trade channels Scientific enquiry into customer satisfaction Brand strength score

Brand Image Dimensions of Brand Image Appeal to reason Appeal to senses Appeal to emotions Branding of Commodities Challenges in Branding commodities Customers benefits Special consideration in branding of a commodity

Unit 9 Product Positioning Positioning Strategies Market segmentation considerations Product line considerations Alternative bases for positioning o Positioning on benefits, problem solution or needs o Positioning for specific usage occasions o Positioning for user category o Positioning against another product o Product class dissociation o Hybrid bases

Tools for Positioning Decision Making Attribute Rating Method Overall-similarity bases method

How to Use Perpetual Maps for Decision Making

Positioning of a Brand An over communicated society Human mind function Media options multiplying Media product and advertising explosion Over simplify your message English man use simple words Dont hide your idea in words be clear about it. You have just a few seconds accepted or rejected? Choose the message which has best chance to get into your prospects mind We need to touch the base with realism about what is already there in the mind of the prospect

What to Do When You Are First

The Mind Eliminates VS. The Mind Ranks

The point that we are trying to drive home is that once your mind is set it is very difficult to change it

Positioning Product Differentiation: Market Segmentation Positioning creates product differentiation New Godrej FridgeFive side cooling the creative people have added immense creativity to the position idea to make the commercial

Product differentiation helps positioningPositioning relies on one or two perceptions, the strong perceptions

When you talk to a group it becomes a segmentEvery communication/ advertising has to address a segment

Positioning Product Differentiation: Market Segmentation Intensity increases with narrow targets segmentation and fragmentationdistinct position separate position

Same product can be positioned differently for different segmentRich and Creamy makes the tasty difference MILKMAID

Rematching product to position You need a new position when you invade into another product category to expand your market New winter care lotion Matching position to segmentThe Horseless Carriage The Car

Ingredients of a Leadership Position Fastest with the modest The instability of equality How do you maintain your leadership Do not disturb the enormous mental space already occupied Enhance your product category Change can dethrone the leader Strength of a brand size of market share

Position of a Follower Do you copy the leader? Can you afford t copy a leader? Size High Price Low price Sex Age Class or segment

Repositioning the competition

Brand Equity Product attributes Product benefits Values Culture Personality User The Concept of Brand Equity Brand awareness Perceived quality Brand loyalty Brand association

Brand Equity Measurement Price premium Customer satisfaction / Brand loyalty Perceived quality Popularity and leadership position Brand value Brand personality Organizational association Brand awareness Market share Market price distribution coverage

Composite Measure of Brand Equity Customer Based Brand Equity

How Brand Equity is Created Strength of Brand Association Favourable brand Association Building Brand Equity Choice of brand element that makeup the brand Developing and implementing marketing support programs Leveraging secondary association by linking the brand to other entities

UNIT 11 Packaging Decisions Packaging

Importance of Packaging in Marketing Creating customer satisfaction Protecting the contents inside Communicating the product attributes Helping in product handling Identifying brand name and seller Promoting the product with attractive design and colours Keeping cost down Information on the ingredients of the product Offering customer convenience

Packaging as an Art

Packaging Concept

Packaging and Product Differentiation

Science and Technology of Packaging Wooden boxes Corruguated Fibreboard boxes Sacks Labeling Importance and Mechanism General requirement Storage precaution Label change control

Functions of Packaging Protection Differentiation / positioning Packaging for promotion Packaging for pricing Packaging for convenience

Packaging Strategies Changing the package Packaging the product line Reuse packaging Multiple packaging Legal aspect of packaging Cost effectiveness of packaging Social aspect of packaging pollution