WEL COME

LINGARAJ COLLEGE ( AUTONOMOUS) BELAGAVI

Marketing Management
 UNIT – 3 Product Management

• Concept and importance, Product classifications;

• Product Planning and Development;
• product life cycle; New Product Development Process;
• Consumer adoption process.
• product mix;
• Branding, Packaging and labeling – features, types, advantages.
 Meaning of Product
• Product is a bundle of benefits which are in physical and psychological form that the
marketer wants to offer or a bundle of expectations that consumers want to fulfill.
• A product is the item offered for sale.
• A product can be a service or an item.
• It can be physical or in virtual form, tangible or intangible. Every product is made at a
cost and each is sold at price.
• For example, we do not buy a pen, but buy a writing service. Similarly, we do not buy a
car, but buy transportation service.
• Just owning a product is not enough. It must serve our needs and wants.
• Thus, a physical product is just a medium that offers services, benefits and satisfaction
to us.
Definition of Product:
• According to Philip Kotler “A product is anything that can be offered to a
market for attention, acquisition, use or consumption that might satisfy a
want or need".
• According to William J. Stanton “One can say a product is a good, service,
or idea consisting of a bundle of tangible and intangible attributes that
satisfies consumers and is received in exchange for money or some other
unit of value".
• According to Alderson, “A product is a bundle of utilities consisting of
various product features and accompanying services
Classification of Products
Based on Users
A. Consumer goods ( 2): Consumer goods are those products which
are bought by the ultimate consumers for personal use. The
consumer goods are further divided into-
1. Convenience goods :These are products that consumers purchase
frequently and habitually, without taking much time and efforts. For
example: Bread, Biscuits, Paste, Newspaper, milk etc.
2. Shopping goods : These goods are those where consumers take
some time and efforts by comparing price, quality, color etc. of
alternative products in stores. The reason for this is because
shopping goods are higher-priced or more important items. For
example: Jewelry, Furniture, silk sarees etc.
Based on Users
3. Specialty goods: Specialty goods are so unique that, the
consumers are willing to spend special effort to buy them. Buyers of
specialty goods focus on seeking out the one specific product they
are looking for. For example: TV sets, phones, Cameras, automobiles
etc.
4. Unsought Goods: The unsought goods are those that the
consumers are not interested to buy or don't put much thought into.
For Example: batteries or life insurance.
Based on Users

B. Industrial Goods : The goods purchased for industrial or business

use are known as industrial goods.
• These are purchased by the buyers as inputs in production of other
products and for rendering services.
• These are meant for non-personal and commercial use. For example:
Raw materials, Machineries, components, spare parts, Accessories,
consumables etc.
 Based on Durability
C. Durable :
• Durable goods are those products that do not need to be purchased
often.
• Tangible products with long life that is, products having bigger life span
lasting for years are called durable goods.
• For example: Fans, refrigerators, pressure cooker, Iron box, grinder etc.
D. Non-durable goods:
• Non durable goods are those which have very shorter life span.
• They may be defined as goods that are immediately consumed in one use
or have a lifespan of less than three years.
• For example: Cosmetics, cleaning products, food, fuel, beer, cigarettes,
paper products, rubber, textiles, clothing and footwear etc.
Based on Tangibility
1. Tangible goods are physical products defined by there.
• Tangible (ability to be touched feel and seen. It has a physical existence.
• For example: Furniture, glass, paper, soap, television etc.
• Whereas, an intangible good is a good that does not have a physical
nature.
2. Intangible goods:
• An Intangible goods are that do not have a physical existence.
• It is not possible to see, touch or feel these goods or services.
• For example: Goodwill, Patent, Brand, Copyright, Trademarks etc.
Product Life Cycle
Product planning
• Product planning is comprised of both the corporate plan as
well as the marketing plan, based on which the product plans
are made.
• Product planning is about deciding a particular product that will
be produced or distributed by the company.
• Product planning involves various other decisions like designing,
packaging, labeling, branding, pricing, and making alterations in
the product as per the requirements of the customers.
Definition:
• According to W.J. Stanton, "Product planning embraces all
activities which enable producers and middlemen to determine
what should constitute Company's line of products".
• According to Karl H. Tietjin: "Product planning is the act of
making out and supervising the search, screening, development
and commercialization of new products; the modification of
existing line and discontinuance of marginal or unprofitable
items".
Product Planning- Importance
1. It identifies Customers' Needs:
• Before Planning for production of new products, it determines the customers'
needs, wants and expectations.
• It directs all the efforts towards the planning and development of new products
according to the expectations.
2. It Ensure Optimum Utilization of Resources:
• Product planning involves development of product by either manufacturing a new
product or by modifying the existing one as per the customers' need.
• Various resources or inputs used are raw materials, labor, finance, Research and
development etc..
• Product planning involves use of these resources more economically so as to
make the production process cost-effective.
3. It Assure Firm's Survival:
• A firm's long-term survival is determined by the performance of its products in the
market.
• The products that fulfill all the requirements of the customers help in the long-term
growth and success of the firm.
• The firm adopts proper planning policies and procedures in order to survive for a longer
period of time in the competitive market.
4. It decreases the risk of product failure:
• Product Planning is an activity which permits to look forward and predict changes.
• It deals with changes and unpredictable effects in advance of the product offered.
• This reduces the risk of product failure in market. It looks into the future and make a
decision from amongst several alternative plans of action.
5. Initiates Marketing Programme:
• In marketing, product planning is one of the processes undertaken at
the very beginning of the marketing programme.
• It involves planning and deciding about the product's marketing
policies, strategies and procedures.
• They are greatly influenced by the decision taken regarding
modification, customization, standardization and elimination of a
product.
• Inefficient product planning will put a negative impact on all other
decisions, programmes, and policies, since all of them are derived or
formulated on the basis of product planning.
6. It Results in Customer Satisfaction:
• As product planning is totally based on the assessment of the needs and
requirements of the customers.
• It comes out with new innovative products or may make some
modification in the existing products which ultimately helps the
customers.
• Thus, customer satisfaction is the end result of an effective product
planning.
7. It ensures Profitability of the Product:
• For ensuring profitability of the product, the firm undertakes various
researches from time to time.
• The Obsolete or loss making (non- profitable) products are also
eliminated through product planning and hence enhances the
profitability.
Product Planning- Components
1. Product Innovation
2. Product Diversification
3. Product Standardization
4. Product Elimination
1. Product Innovation:
• An innovation is a process for introducing new ideas, workflows,
methodologies, services or products.
• Business innovation should improve on existing products, services or
processes; or it should solve a problem; or it should reach new customers.
• Innovations increases demand and seek an opportunity to serve the present
and potential market at a profit.
• For example: The electronics company LG introduced a new type of screen,
its so flexible that one can roll it up like a newspaper and put it in their bag.
2. Product diversification:
• Diversification is a firm's strategy to enter into a new products or
product lines, new services or new markets, involving substantially
different skills, technology and knowledge.
• Product diversification refers to the product expansion in the depth
and/or in width.
• Depth of product-line implies the assortment of colors, sizes,
designs, quality, etc.
• For example: TATA Group initially ventured into the steel
manufacturing business and diversified it into other segments such
as hospitality, aviation, automobile, power, etc.
3. Product standardization:
• Product standardization refers to the process of maintaining
uniformity of products and services sold in different markets.
• In other words setting identical characteristics for a particular
product or a service is called standardization.
• For an example, if a particular company comes up with the
decision of standardizing the product then the product is being
manufactured using the same materials, same processes and
even sold under the same name like computers, Medicine
products etc.
4. Product elimination:
• Every marketing unit reaches a stage where some of its products
are eliminated or deleted from the product-line.
• This product elimination, termination or withdrawal becomes a
necessity because of its low profitability, low value for consumers,
obsolete, inability to compete and decline in market share.
• Apple dropped, once upon a time market leading product- the
iPod because with the advent of smartphones, the market
demand for iPod declined suddenly.
New Product Development Process:
Product Development:
• New product development covers the complete process of bringing a new
product to market, renewing an existing product or introducing a product in a
new market.
New Product Development Process
1. Idea generation:
• The new product development process starts with generation of a product idea.
• Idea generation refers to the systematic search for ideas for new product
development.
• A lot of ideas are generated till the business finds the most suitable ones.
• Two sources of new ideas can be identified:
A. Internal idea sources: The Company finds new ideas internally. That means
research and development, and also contributions from employees.
B. External idea sources: The Company finds new ideas externally. This refers to
all kinds of external sources, e.g. Customers, distributors and suppliers and also
competitors.
2. Idea Screening:
• Idea screening means filtering the ideas to pick out good ones.
• The ideas which do not meet the objectives of the Company and
marketing needs, those ideas are eliminated from the list.
• Therefore, the company would like to go ahead only with those product
ideas that will turn into profitable products.
• Thus the basic purpose of screening is to filter the poor ideas and select
the most promising ones.
3. Concept development and Testing:
• Idea gets transformed into a product concept.
• The concepts will be presented to consumers either symbolically
or physically and will check whether the product concept will
succeed or not.
• For some concept tests, a word or picture description might be
sufficient.
• However, to increase the reliability of the test, a more concrete
and physical presentation of the product concept may be needed.
4. Marketing strategy development:
• It is time to design an initial marketing strategy for the new product
based on the product concept for introducing it in to the market.
• The firm develops a tentative marketing strategy.
• A plan is made about the price, promotion and distribution strategy for
the proposed product.
5. Business analysis:
• Once decided upon a product concept and marketing strategy,
marketer can evaluate the business attractiveness of the
proposed new product.
• A review of the demand, sales, costs, investment and profit for the
new product.
• This is done to find out whether these factors satisfy the
company's objectives or not.
6. Product development:
• The new product development process goes on with the actual product
development.
• The whole process or job will focus on the product concept which is
approximately close to the consumer product specification.
• A sample or samples of new product will be created by the R & D
department of the business.
7. Test marketing:
• Test marketing is a concept of the new product introducing on a
very small scale in a very small market.
• Before launching the new product on a larger scale, the new
product is placed on sale for a test in one or more selected
localities or areas.
• If the new product is successful in this market, then it is
introduced on a large scale.
8. Commercialization:
• Based on the information of test marketing, the product is modified
and improved and strategies are developed.
• Now the product is ready for introduction in the larger market. If the
test marketing is successful, then the company introduces the new
product on a large scale,
• say all over the country and makes a large investment in the new
product.
 Product Mix- Meaning
• Product mix, also known as product assortment, is the total number of
product lines that a company offers to its customers.
• A product line is a group of related products all marketed under a single
brand name that is sold by the same company.
• The company may have many products under the same product line as
well.
• All of these product lines when grouped together form the product mix of
the company.
Product Mix: For example:
• Tata Co. is engaged in producing different goods and services such as
information technology, consumer retail, Automobiles, insurance,
financial services, infrastructure, Aerospace and defense, Tourism and
travel, telecom and media, Trading and investment, steel etc.
• For example: Reliance Industries is present in numerous sectors like
logistics, textiles, retail, natural resources, science and technology,
health care, energy, communications, construction, petrochemicals
etc.
Product Mix- structure/Components
1. Width: The width of the mix refers to the number of product lines the
company has to offer.
For example: If a company produces only soft drinks and juices, this
means its mix is two products wide. Coca-Cola deals in juices, soft
drinks, and mineral water and hence the product mix of Coca- Cola is
three products width.
2. Length of product line: It refers to the total number of product items
offered in a product line by the business firm. For example the Nike
Company have three product line- Footwear, Apparels and equipment.
3. Length of the product mix: It refers to the number of product items
offered by the business firm.
For example: Product mix of Nike.
• Footwear - Boots for strikers, Midfielders, Defenders, Sneakers.
• Apparels - Headwear, Tops, Jersey, Jackets, Shorts, Shocks.
• Equipment - Ball, Bags, Watches.
4. Depth: The depth of the product mix refers to the total number of
products within a product line.
• There can be variations in the products of the same product line.
• For example: Colgate has different variants under the same product line
like Colgate advanced, Colgate active salt, etc.
5. Consistency:
• Product mix consistency refers to how closely products are linked
to each other.
• Less the variation among products more is the consistency.
• For example: a company dealing in just dairy products has more
consistency than a company dealing in all types of electronics.
 Product Mix Strategies
1. Expansion of Product Mix: Expansion of product mix implies
increasing the number of product lines. New lines may be related or
unrelated to the present products.
• For example, Bajaj Company may add new varieties in two wheelers
and three wheelers (related expansion) and adding cars in its product
mix (unrelated expansion).
• When a company finds it difficult to stand in the market with existing
product lines, it may decide to expand its product mix.
2. Contraction of Product Mix: Sometimes, a company contracts its
product mix.
• Contraction consists of dropping or eliminating one or more product
lines or product items from its product mix. Here, huge product lines
are made thin.
• Some models or varieties, which are not profitable, are eliminated.
• This strategy results in more profits from fewer products.
• For example: If Hindustan Unilever Limited decides to eliminate a
particular brand of toilet soap from the toilet soap product line, it is
an example of contraction of product mix.
3. Deepening Product Mix Depth: Here, a company will not add new
product lines, but expands one or more existing product lines. Here,
some product lines become huge from thin.
• For example, Hindustan Unilever Limited offering varieties in its edible
items decides to add more varieties.
4. Alteration or Changes in Existing Products:
• Instead of developing completely a new product, marketer may
improve one or more established products.
• Improvement or modification can be more profitable and less risky
compared to completely a new product.
• For example, Maruti Udyog Limited decides to improve fuel efficiency
of existing models.
• Modification is in the form of improvement of qualities or features or
both.
5. Developing New Uses of Existing Products: This product mix
strategy finds new uses of the existing product. For example, Coca
Cola may be convenient to use its soft drink along with lunch or a
snack or in a party.
6. Product Differentiation: This is a unique product mix strategy.
This strategy involves no change in price, quality, feature or
varieties. In short, products have not undergone any change.
Product differentiation involves establishing superiority of products
over the competitors.
7. Trading Up: Trading up consists of adding the high-price-prestige
products in its existing product line.
• we refer trading up as increasing the number of features (and their
associated benefits) of a product, improving its quality, or backing it
with a superior level of service to justify a higher price.
8. Trading Down: The trading down product mix strategy is quite
opposite to trading up strategy.
• A company producing and selling costly, prestigious, and premium
quality products decides to add lower- priced items. The opposite is
trading down.
• It's reducing the number of features (and their associated benefits)
or the quality of a product to suit the selling price demanded by its
customers.
Factors affecting Product mix strategy
1. Market demand: The change in the demand of a product affects the
decision of product mix.
2. Competitors' actions and reactions: If a company thinks that it can meet
the competition well by adding a new product it can decide to produce the
product.
3. Change in purchasing power or behaviour of the customers: If the
number of customers increases with the increase in their purchasing
power, then the company may think of adding one more product.
4. Change in company desire: The objective of the firm i.e., increasing the
profitability of the concern may eliminate or it may start the process of
producing a new product.
5. Advertising and distribution factors: If the advertising and distribution
channel are the same, the company may add one more item to its product
line without any expenses.
6. Condition of Economy: A company should keep in mind the domestic
economy with reference to the world economy. This is more relevant when a
company is involved in international trade.
7. Production Capacity: Marketing mix decisions, to a greater extent,
depend on plant or production capacity of company. Company will design its
product mix in a way that optimum production capacity can be utilized.
8. Government Rules and Restriction: Every company will produce such
products, which are not restricted or banned by the governments. Even,
sometimes, company has to stop certain products or varieties when it is
declared as illegal.
9. Profitability: Every business unit tries to maximize its profits. It
makes certain changes in its product mix in a way to realize positive
impact on profitability. Company prefers to introduce more product
lines or product items in existing product lines to improve its
profitability.
10. Goodwill of the company: If the company is of repute, it may take
the decision of adding a new product without any problem because it
knows that the customer will accept any product introduced by the
firm.
Why do new products fail in the market?
1. Poor product quality
2. Higher price
3. Poor timing
4. Extent of competition
5. Lack of promotional measures
6. Inefficient distribution policy
7. Poor after-sale service
8. Imitation product
9. Unavailability of spare parts
10. Inadequate market analysis
1. Poor product quality: A product, which is of poor quality, cannot be
sold in the market. If the new product is defective and it fails to meet
the needs of the consumers, certainly it fails in the market.
2. Higher price: Higher production and distribution costs may lead to
higher price. Such a product cannot be sold in a market consisting of
middle and lower income buyers.
3. Poor timing: It is important that a product, to be successful, is
introduced in the market at the right time. If it is introduced at a wrong
time it may turn out to be a failure.
4. Extent of competition: Where there are a large number of sellers for
a particular product, the buyer will have many alternatives. Therefore,
in such a condition unless the marketer brings out the product to the
satisfaction of the buyers, he cannot be successful.
5. Lack of promotional measures: Popularizing the brand, particularly,
in the introduction stage of a product is essential. Such a step will
ensure repeated buying and bring long-term benefits for the marketer.
Failure to do so will 'prove to be disastrous for the product.
6. Inefficient distribution policy: It is important that a product reaches
the right market at the right time and at the right price. The inefficient
distribution policy of the marketer may lead to many problems.
7. Poor after-sale service: Most marketers, particularly those
marketing durables, two-wheeler, etc., are more convincing while
making sale. When the customer requires service later and
approaches the seller, he may show indifference.
8. Imitation product : The presence of a number of imitation
products in the market makes the original products fail. An average
buyer may not be able to distinguish between the genuine product
and the fake one.
9. Unavailability of spare parts: In the case of durable goods like
televisions sets, Air conditioner, two wheeler and cars etc., easy
availability of spare parts is an important requirement. Unavailability
of spares at the required time may frustrate the buyers.
10. Inadequate market analysis: Biased marketing information or
improper analysis will yield only wrong data. Acting on such data
leads to new product failure.
 Elements of Branding
1. Brand Name - It is also called Product Brand. It can be a word, a
group of words, letters, or numbers to represent a product or
service. For example - Pepsi, iPhone 5, etc.
2. Trade Name - It is also called Corporate Brand. It identifies and
promotes a company or a division of a particular corporation. For
example - Dell, Nike, Google, etc.
3. Brand Mark - It is a unique symbol, coloring, lettering, or other
design element. It is visually recognizable, not necessary to be
pronounced.
4. Trademark - It is a word, name, symbol, or combination of these
elements. Trademarks are is legally protected by the
PACKAGING
Labelling:
Meaning of Labelling:
• Labeling is another important means of product identification like
branding and packaging.
• Labeling is a process of giving an identification to product by
attaching a label to product itself or its container which describes
information about it.
• Label can be a piece of paper, printed statement, imprinted metal,
leather and wrapper or seal, which is either part of packaging or
attached to it.
 Definitions of Label

• According to Mason and Rath " Label is an information tag, wrapper or

seal attached to a product or product's package".
• According to W. J. Stanton " Label is the part of a product that carries
verbal information about the product or seller".
Different Types of Labeling
1. Brand label: It is a label which provide details about the brand to
which a product belongs to. It do not mentions any other details
except its brand name. For example: Lux, Nirma, Rexona, Mysore
Sandal, Samsung etc.
2. Grade Label: Grade label are the one which denotes the quality
or grade level of a product. It identifies the quality of a product by
letter number or Word. Fruits may be labelled as A, B, or C on
number 1 and number 2.
3. Descriptive Label: Descriptive label are the one which gives
important information about the product. It describes the product: who
made it, where it was made, when it was made, what it contains and
how it is to be used safely.
4. Informative Label: Informative label are the one that carry a large
amount of information and provides detailed information about product.
It is distinct from descriptive labeling in the way that it describes full
instruction about product usage and care to be taken. These labels
consist of recipes and the use and care of the product.
Importance/Functions of Labelling
1. Provides Identification: Labelling helps the consumers in the
identification of products among large number of products available in
the market. It prevents confusion among the people that can be
created by the substitute products of other competitors. Product of
distinct brands Tata tea, Horlicks and Lux are easily recognizable by
users through their labels.
2. Provides Description: Label is a medium that communicates the
information regarding the product to customers. It is basically a slip
that contains details like nature, quality, price, quantity, how to use etc.
3. Makes Products Comparison Easy: By reading the labels of different
products customers can choose the best one as per their choice. It
enables the customers in understanding & checking product even
before using it.
4. Helps In Marketing: Labeling is considered an efficient sales tool for
marketing of the product. Many times the people are encouraged to buy
a product just by seeing the labels of the product. It will create a long-
lasting influence on customers.
5. Makes Products Grading Easy: Through grading, business divides
their large varieties of products as per quality for a different class of
customers in the market. Customers easily recognizes the quality of
different products through reading their labels. It will enable them to
make the right choice as per their needs.
6. Protects Customers From Getting Cheated: Labeling helps customers
in the right choice. Customers can easily recognize fake products and can
be avoided from adulteration and harm by seeing the information about
ingredients, the manufacturing date & date of expiry provided by labels.
Therefore, it avoids all chances of wrong decisions during the buying
process.
7. Provides Information As Per Law: Labeling is a means through which all
required information required by law is provided on the product package.
There are certain poisonous & hazardous products, with which providing
safety tips & certain warning like "smoking is injurious to health" on
cigarette pack, is very important to be mentioned.