Product Managemnt
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Transcript of Product Managemnt
8/8/2019 Product Managemnt
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11.1
Product Management
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11.2
Product
• is a bundle of satisfaction that a customer buys
• almost always a combination of tangible and intangible
benefits
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11.3
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11.4
Core
Product
Attributes Styling
Colour
Brand
Name
PackagingQuality
InstructionsManual
After sales
services
Delivery
points &
systems
Installation
(for bulky
products)
C u s t o m e r
e d u c a t i o n
a n d T r a i n i n g
Customer
complaint
management
Payment
options
(for high
priced
prod-
cts)
Replacement
or
returns
policy
Guarantees &
warranties
Core Product
Formal
Product
Augmented
Product
Future ProductThe total product concept
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11.5
Product Concepts
• What constitutes a Product?
• Core- Generic product for an airline is its aircraft.• Formal and Augmented Product – The additional features that s
firm adds up to its product along with the aesthetics that it
provides to give the product a distinctive appeal differentiates a
formal product from the core product.• The tangible component of the product along with the formal and
core components is called as augmented product.
• Potential Product – Everything that might be done to attract and
hold customers. These offerings differ from one market to another because of varying economic and competitive conditions.
• Thus product is the total concept that a customer buys
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11.6
Classification of Product
1. Durability
• Non-durable-less mark up, high
advertising expenses, distribution channel
• Durable- High margin
• services
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11.7
Buy less frequently> Gather product information> Fewer purchase locations> Compare for:
• Suitability & Quality• Price & Style
Special purchase efforts> Unique characteristics> Brand identification> Few purchase locations
New innovations> Products consumers don’t
want to think about.>Require much advertising & personal selling
Buy frequently & immediately> Low priced> Many purchase locations> Includes:
• Staple goods• Impulse goods• Emergency goods
2.Consumer-Goods Classification
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11.8
Pdt Mix Items=12
No of Lines = 3
2b 2c 2d
3c3b
1d1c1b
3a
1a
2a2e
PL1
PL2
PL3
length
W
I
D
T
H
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11.9
Multibrands –HLL Products
LUX
DOVELE SANCY
PEARS
REXONA
LEFEBUOY
HAMAM
BREEZE
JAI
MOTI
SURF
RIN
WHEEL
SUNLIGHT
ALA
501
BRUBROOKE BOND
RED LABEL
LIPTON GREEN LABEL
3 ROSES
TAAZA
DEEPAMTAJ MAHAL
SUPER Dust
Ruby dust
A1
Product
Line
Length
Product Line 1Bath Soaps
Product Line 2Fabric Wash
Product Line 3Beverages
Product Mix Width
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11.10
• Breadth in product line refers to product linesmarketed by firm.
• Depth-the number of product items andvariations
• Consistency- the degree of similarity between product lines with respect to end use,
technology,production techniques &distribution channels.
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11.11
Product Line
A product line refers to a group of products clubbed together byvirtue of satisfying a particular class of needs, being used together or distributed through the same channels or possessing common
physical or technical characteristics..
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11.12
Factors contributing to product line decision:
1. Structural changes in the market-changing consumer lifestyles and demographics
2. Media development3. Intensity of inter-firm rivalry
4. Need to be present in all market segments
5. Marketing capabilities of the firm
6. Induce upselling7. Induce cross selling
8. Sales force and distributors pressure
.
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11.13
Trading Up & Trading Down
ECONOMIC PRODUCTS
ADD PREMIUM PRODUCTS
PREMIUM PRODUCTS
ECONOMIC PRODUCTS
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11.14
Line filling
Add more items within the present range• Satisfy dealers
• Utilise excess capacity
• Reaching incremental profits
• Fill in the holes
Disadvantage
Cannibalization and customer confusion( just-noticeable difference)
Line modernisation
Reformulation, redesign, changing unitsize, adding and removing features
Eg Pan Parag and microsoft
Line featuring- the idea is to attract consumers into the showrooms and thentry to get them exposed to other models.
Line Pruning-
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11.15
BCG matrix
BOSTON CONSULTING GROUP (BCG)
MATRIX is developed by BRUCE
HENDERSON of the BOSTON CONSULTING
GROUP IN THE EARLY 1970’s.
According to this technique, businesses or products
are classified as low or high performers dependingupon their market growth rate and relative marketshare.
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Relative Market Share and
Market Growth
To understand the Boston Matrix you
need to understand how market shareand market growth interrelate.
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11.17
MARKET SHARE
• Market share is the percentage of the total market that is being serviced byyour company, measured either in revenue terms or unit volume terms.
• RELATIVE MARKET SHARE
• RMS = Business unit sales this year
Leading rival sales this year
• The higher your market share, the higher proportion of the market youcontrol.
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11.18
MARKET GROWTH
RATE • Market growth is used as a measure of a market’s
attractiveness.
• MGR = Individual sales - individual salesthis year last year
Individual sales last year
• Markets experiencing high growth are ones where thetotal market share available is expanding, and there’s plenty of opportunity for everyone to make money.
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11.19
THE BCG GROWTH-SHARE
MATRIX • It is a portfolio planning model which is based on
the observation that a company’s business units
can be classified in to four categories: Stars
Question marks
Cash cows Dogs
It is based on the combination of market growth and
market share relative to the next best competitor.
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11.20
Assigning and Reaping Resource
20%-20%-
18%-18%-
16%-16%-
14%-14%-12%-12%-
10%-10%-
8%-8%-
6%-6%-4%-4%-
2%-2%-
00Marke
tG
row
th
Rate
3
?
Question marks
? ? ?
2
1
Cash cow
6
Dogs
8
710x 4x 2x 1.5x 1x10x 4x 2x 1.5x 1x
Relative Market Share.5x .4x .3x .2x .1x.5x .4x .3x .2x .1x
Stars
5
4
Negative cash Flow
Positive cash flow
Moderate cash flow
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11.21
Star Revenue ++++
Expenses - - -
Net +
Problem ChildRevenue +
Expenses - - -
Net - -
Cash Cow
Revenue ++++++
Expenses - -
Net ++++
Dog
Revenue ++
Expenses - - - - -
Net - - -
Maintain Hold
Harvest
MarketGrowth Rate
High
Low
10 %
Build/
Withdraw
Kill/Divest
High Low1.0X
Relative Market Share
The BCG Model: cash position and strategy
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11.22
BCG MATRIX
scorpio
Jeepbalero
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11.23
Limitations of BCG Matrix• Predicting profitability from growth and
market share• Difficulty in dertermining market share
• Disregard for human aspect
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11.24
Product Sales
Profits
Product
Development
Phase
New Product
Development
Cost
Sales and profit over a life cycle of a product
Profit
Break even
Point
Sales
Decline
Optimum Profit
Realization
Maturity
Growth
Introduction
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11.25
Strategies in the Introduction
Stage
• Products are unfamiliar to consumers
• Market segments not well defined
• Product features not clearly specified
• Competition tends to be limited
• Sales volume increases slowlyStrategies
• Develop product and get users to try it
• Generate exposure so product becomes
“standard
Ski i d P i
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11.26
Skimming and Penetration
Skimming-1. High price
2. Target customers least price sensitive
3. Distribution outlets should be limited to protect the high
prices
4. Effective when high entry barriers exists because it makes
the category very attractive to potential customers.
5. Eg consumer durables, industrial products
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11.27
Penetration
1. Low price2. First movers advantage
3. Eg consumer packaged goods
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11.28
Strategies in the Growth Stage
• Competitors increase
• Pressure on price
• Primary key to success is to build consumer preferences for specific brands
• Market segmentation begins the key issue• Characterized by strong increases in sales
Strategies
• Leader and followers strategy• Brand recognition
• Differentiated products
• Financial resources to support value-chain activities
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11.29
Strategies in the Maturity Stage
• Aggregate industry demand slows
• Market becomes saturated, few new adopters
• Direct competition becomes predominant
• Marginal competitors begin to exit
Strategies
• Efficient manufacturing operations and process
engineering
• Low costs (customers become price sensitive)
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11.30
Strategies in the Decline Stage
• Industry sales and profits begin to fall
• Strategic options become dependent on the actions of rivals
• Technological obsolesce, consumer behaviour
Strategies
• Maintaining
• Exiting the market
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11.31
“Every morning in Africa, a gazelle wakes up It knows it must run faster than the fastest lion or it will be killed Every morning a lion wakes up.It knows it must outrun the slowest gazelle or it will starve to death It does not matter whether you are a lion or a gazelle.When the sun comes up, you better start running”.