Marketing 3 | Product Management

Module 1

Introduction to Product Management

Module Description
This module focuses on the in-depth discussion of the different definitions of product
management, the four key areas of product management, the role of product management, and
product manager’s roles and planning skills.

Purpose of the Module

This module lets the students learn about the product management, its key areas, and the roles
and skills of product managers.

Module Guide
 This module must be used by those students who don’t have gadgets or have no internet
connection in their area.
 The answered quizzes or activities must be submitted to the instructor on or before the
specified deadline.
 There must be no erasures when answering the quizzes or activities.

Contact your instructor if you have questions regarding this module.

Module Outcomes
At the end of the course, the students must be able to understand the concept of product
management, what product managers do and its role in doing business.

Module Requirements
At the end of this module, the students must answer a quiz and comply the assignment given by
the instructor. These must be submitted on or before the specified date of submission.
Let’s Read

PRODUCT MANAGEMENT DEFINED

Before proceeding with the key areas of product management and developing new
products, it is important to understand first the definition of product management. It is very much
useful to clarify the what we mean by product management. The following are some of the
definitions of product management:
“Product management is above all else a business function, focused on maximizing
business value from a product.”
“Product management is a key organizational process for high tech B2B companies
involving more or less all parts of the company. The product management arena is defined as
four key areas: product creation, product strategy, product planning, and product marketing (go-
to-market).”

It should be clearly understood that there are other definitions of product management
other than what are given above. These other definitions of product management are more or less
the same around the globe in different business and academes. It should be understood, however,
that product management and its definitions are ever evolving.

THE FOUR KEY AREAS OF PRODUCT MANAGEMENT

There are four key areas of product management. These are product planning, product marketing,
product strategy, and creating insights.

In product planning, the identification and articulation of market requirement for a

product’s features are given high consideration. Identifying market requirement in product plan
will help plan and ensure the acceptability and survival of a new product even before being
offered in the market. This also serves as basis for strategic pricing, distribution, and promotion
of a new product. With this, one can be assured that the right product will be offered.
Product marketing is the activity to promote and sell the product to the market. In this key area of
product management, the product is being enabled to reach its potential.
Product strategy is what the inventor/innovator/business hopes to accomplish with its product.
This provides a guide for the value of product being delivered or will be delivered over its life
cycle.
Creating insights is understanding legacy, ecosystems /markets and driving forces

THE ROLE OF PRODUCT MANAGEMENT

The Three Pillars

The product management’s role is built on three pillars:

Product Planning
Product Strategy
Product Marketing
Product planning and Product marketing are clear outputs from Product Management. To
be successful a Product Strategy is needed in aligning the two areas. Insights – not only the
market insights – is the foundation for generating a product strategy and to tie it all together.

Product Planning
Product planning is a difficult term to define because it’s so broad and involves so many
different aspects of a product manager’s job. In fact, it’s probably a much larger portion of a role
as a product manager than you realize.
 At a basic level product manager will just collect requirements from all stakeholders and
hand over the compiled list to development. It is also important to remember that product
managers will drive the requirements gathered. This is done by coordinating to the marketing
sales where you want to go with your product.

Product planning involves all of the internally focused decisions, steps and tasks that will
be necessary to develop a successful product. In other words, it involves everything you’ll need
to do or decide that will affect the product itself.
Note: Product Planning is not a one-time meeting or activity.

Product Strategy
A product strategy is a high-level plan describing what a business hopes to accomplish
with its product, and how it plans to do so. This strategy should answer key questions such as
who the product will serve (personas), how it will benefit those personas, and what are the
company’s goals for the product throughout its lifecycle.

There are many schools describing how strategies should be created. After all – it is not
that difficult. What is trickier is to implement strategies in products and in our product
management work. The tools we use are directly connected to the strategy. It can be how we
prioritize requirements. It can be deciding in which customer we douser studies by. It can be in
what order a new product line will be launched.

Product strategy work should result in some decisions, priority calls and actions. These
become the product plan – so product strategy drives the product plan. Product strategy serves
three main valuable business purposes: it provides clarity for your company; it helps prioritize
product roadmap; and it improves a team’s tactical decisions.

Product Marketing
The basic product manager produces the marketing items on the checklist. We probably provide
a good and useful slide deck for the upcoming customer visit. The High Performing product
manager identifies target applications, discovers pains and gains for the customer, and the
journey for solving them. The High Performing Product Managers build a journey for our
customers’ success and a resonating focus for our product. [
Product marketing is the process of bringing a product to market and overseeing its overall
success. Product marketers are focused on understanding and marketing to customers. They drive
demand and usage of the product, which often includes writing positioning and messaging.
Source: https://bit.ly/2VEBY1e

THE PRODUCT MANAGER: ROLES AND PLANNING SKILLS

The product manager’s job is to oversee all aspects of a product/service line to create and deliver
superior customer satisfaction while simultaneously providing long-term value for the company.
To accomplish this, there will be various day-to-day, short-term, and long-term activities.

Day-to-Day Duties
On a day-to-day basis, the product manager might have the following responsibilities:
Maintain a product fact book.
 Motivate the sales force and distributors.
 Collect marketing information, including competitive benchmarks, trends and
opportunities, and customer expectations.
 Act as a liaison between sales, manufacturing, research and development (R & D), and
soon.
 Control the budget and achieve sales goals.

Short-Term Duties
On a short-term (e.g., fiscal year) basis, the product manager might have the following
responsibilities:
 Participate in annual marketing-plan and forecast development.
 Work with advertising departments/agencies to implement promotional strategies.
 Coordinate trade shows/conventions.
 Initiate regulatory acceptance.
 Participate in new-product development teams.
 Predict and manage competitors’ actions.
 Modify product and/or reduce costs to increase value.
 Recommend line extensions.
 Participate in product-elimination decisions.
Long-Term Duties
On a long-term (strategic) basis, the product manager might have the following responsibilities:
 Create a long-term competitive strategy for the product.
 Identify new-product opportunities.
 Recommend product changes, enhancements, and introductions.

The Cross-Functional Roles of Product Managers

 Gathering market data from the sales force
o Product managers must effectively gather and use market data from the sales
force. Salespeople must be provided with effective and efficient way of sharing
market knowledge with product managers. Salespeople must be recognized by
product manager due to their contributions. The product manager must be able to
show the salespeople why and how the gathered data is being used to create an
advantage of a product offering.
 Communicating with salespeople
o The product manager may communicate with salespeople on the because it is
quicker. However, this doesn’t mean that the product manager should not provide
the salespeople with written information.
 Sales training
o Training effectiveness is essential factor in the success of new product launch.
 Planning
o The product manager should specifically make plans or participate in planning
process to ensure the success of a new product offering.
 Establishing trust
o Product managers should demonstrate that support systems from within the team
or organization are already established, meaning proving that the product offering
is already tried and tested, and that filling customer orders can be placed if sales
are done.
 Qualifying needs
o The product manager must provide customer-friendly questionnaires to help
salespeople asses the customers before closing sales.
 Customizing solutions
o After qualifying the needs of the customers, the product manager should look for
creative ways to demonstrate a product’s competitive edge.
 Building partnerships
o Product managers should be able to develop customer partnership. Interactions
between customers and product support services will help create long-term
relationship and partnership.
 New-product development
o Product managers should participate in the operations during new-product
development. In this way, the product manager can represent the voice of the
customers, balancing return on investment, customer satisfaction, and
manufactured cost.
  Strategic interactions
o The product manager may opt to indulge in strategy meetings with operations
function, separate from new-product development.

Planning Skills
 Strategic thinking
o This begins with posing the right questions, then understanding the market and
competition, and lastly be defining the road map of a product.
 Analytical skills
o This is about researching and analyzing the right data to support in making proper
product decisions while keeping in mind the profit.
 Interpersonal skills
 o Product managers need to influence people along with the different products
being produced. Product managers should be to communicate and disseminate
their vision to everyone effectively.

Let’s Remember:
 “Product management is above all else a business function, focused on maximizing
business value from a product.”
 “Product management is a key organizational process for high tech B2B companies
involving more or less all parts of the company. The product management arena is
defined as four key areas: product creation, product strategy, product planning, and
product marketing (go-to-market).”
 There are four key areas of product management. These are product planning, product
marketing, product strategy, and creating insights.
 The product management’s role is built on three pillars: product planning, product
strategy, and product marketing.
 The product manager’s job can be accomplished through various day-to-day, short-term,
and long-term activities.
 The cross-functional roles of product management: gathering market data from the sales
force; communicating with salespeople; sales training; planning; establishing trust;
qualifying needs; building partnerships; new-product development; and strategic
interactions.
 Strategic thinking, analytical skills, and interpersonal skills are some of the planning
skills necessary for a product manager.
 Module 2

Understanding Markets

Module Description
This module helps students gain a broader understanding of markets. Specifically, topics on
product management, generic market, segmentation, targeting, differentiation, and positioning
will be thoroughly discussed.

Purpose of the Module

This module aims to let students have a basic understanding different markets when doing
product management.

Module Guide
 This module must be used by those students who don’t have gadgets or have no internet
connection in their area.
 The answered quizzes or activities must be submitted to the instructor on or before the
specified deadline.
 There must be no erasures when answering the quizzes or activities.
 Contact your instructor if you have questions regarding this module.

Module Outcomes
At the end of this module, students must be able to define generic and product market and
describe the segmentation, targeting, differentiation, and positioning strategies along with its
uses.

Module Requirements
At the end of this module, the students must answer a quiz given by the instructor.
This must be submitted on or before the specified date of submission.

Key Terms
Product Management
Generic Market
Segmentation
Targeting
One-for-all strategy
One-for-each strategy
Product Differentiation
Product Positioning
Lesson No: 1
Lesson Title: Product Management vs Generic Market

Let’s Read

Product Management vs Generic Market

Product management is a way to organize the planning, production, marketing and other tasks
related to the creation and distribution of a product. It involves the coordination of teams, data,
processes, business systems and more. In reality, product management can be a complicated
matter. There are a lot of moving parts in the creation of any product, regardless of its size.
Without a methodology and proper tools to manage the many elements that must be tracked
throughout the life cycle of the product, the risk of failure is greatly increased. To understand
product management and its challenges requires a deeper dive than a two sentence definition.
There are, for example, complementary disciplines that can be part of product management, such
as product development and product marketing. Their objective is to maximize sales revenues,
market share and profit margins.

Product management has been called the intersection between business, technology, and user
experience. A good product manager must be experienced in at least one, passionate about all
three, and conversant with practitioners all three

Business
Product management is above all else a business function, focused on maximizing business value
from a product. Product managers should be primarily focused on optimizing return on
investment.

User Experience
Perhaps most importantly, the product manager is the voice of the customer inside the business,
and thus must be passionate about customers and the specific problems they’re trying to solve.
This doesn’t mean the product manager should become a full-time researcher or a full-time
designer, but they do need to make time for this important work. Getting out to talk to customers,
testing the product, and getting feedback first-hand, as well as working closely with internal and
external UX designers and researchers, are all part of this process.

Technology
There’s no point in defining what to build if you don’t know how it will get built. This doesn’t
mean a product manager needs to be able to code, but understanding the technology stack – and
most importantly, the level of effort involved – is crucial to making the right decisions. This is
key in an Agile world where product managers spend more time with the development team than
with anyone else inside the business, and need a shared language and understanding with their
engineers.

On the other hand, generic markets typically contain groups of consumers that share a broad
need that a wide variety of products or services can meet. For example, everyone needs food, and
everything from grocery stores and restaurants to farming cooperatives can meet the need for
food. In a generic market, the method of meeting the need takes second place to the simple
capacity to meet the need. A cooperative that specializes in organic food holds no intrinsic
advantage over a fast-food joint in its capacity to serve the generic market of people that eat.

As a rule, pursuit of generic markets offers little value to businesses. The heterogeneous nature
of the market in terms of both demographics and psychographics, as well as the wide range of
competition, makes it extremely difficult to engage in effective marketing campaigns. In essence,
the attempt to capture a significant share in a generic market amounts to attempting to please
everyone and, consequently, pleasing no one. Even automobile manufacturers that serve a
somewhat generic market do not attempt to market every vehicle to every consumer. General
Motors, for example, owns the Cadillac and Chevrolet brands. Cadillac aims at affluent car
buyers, while Chevy aims more at the middle and working class.
Lesson No: 2
Lesson Title: Segmentation and Targeting

Let’s Read

Segmentation and Targeting

The Concept of Targeting
Targeting is the process of identifying customers for whom the company will optimize its
offering. The logic of identifying target customers and the strategic and tactical aspects of this
process are in more detail below.

The Logic of Targeting

Imagine a company operating in a market in which there are two customers with different
needs. Which of these customers should the company serve? The intuitive answer is—both.
Indeed, all else being equal, the greater the customer base, the greater the company’s profit
potential. Should the company choose to target both customers it has two options to develop an
offering. One approach is to develop the same offering for both customers (one-for-all strategy),
and the other is to develop different offerings based on the needs of each one
(one-for-each-strategy).

The one-for-all strategy of developing the same offering for both customers might not be
effective for customers with different needs because the offering will end up not creating value
for at least one (and perhaps even both). For example, if the customers vary in terms of their
price sensitivity, developing either a high-quality, high-priced offering or a low-priced, low-
quality offering will inevitably fail to fulfill the needs of one of these customers because one will
find the offering too expensive and the other will deem it of insufficient quality. Furthermore,
developing a mid-priced, mid-quality offering will likely fail to fulfill the needs of both because
the offering will still be too expensive for one of the customers and of insufficient quality for the
other.

The one-for-each strategy of developing a separate offering for each customer might not
be effective because the company might not have the resources to develop offerings that meet the
needs of both customers. For example, the company might not have the scale of operations to
develop a low-priced offering for the price-sensitive customer and the technological know-how
to develop a high-performance offering for the quality-focused consumer. Furthermore, even if
the company has resources to develop separate offerings, both customers might not be able to
create value for the company. For example, the customer for the high-quality product might not
have the financial resources to afford the company’s offering, or might have needs that the
company cannot fulfill without incurring costs that exceed the benefits received from serving this
customer.

As a general rule, developing a separate offering for each individual customer is

beneficial when the incremental value created by customizing the offering outweighs the costs of
developing the offering. To illustrate, when the cost of customization is relatively high (as with
durable goods, such as cars, household appliances, and electronic equipment), companies tend to
develop offerings that serve relatively large groups of customers, whereas in industries where the
cost of customization is relatively low (as in the case of delivering online information), offerings
can be tailored for smaller groups of customers.

The Essence of Segmentation

Segmentation is a categorization process that groups customers by focusing on those differences
that are relevant for targeting and ignoring those differences that are irrelevant. The process of
segmentation is based on the notion that the efficiency of a company’s marketing activities can
be greatly improved by ignoring the nonessential differences among customers and treating
customers with similar needs and resources as if they were a single entity. Accordingly,
segmentation focuses marketing analysis on the important aspects of customer needs, enabling
managers to group customers into larger segments and develop offerings for the entire segment
rather than for each individual customer.

Segmentation can involve two opposing processes—differentiation and agglomeration.

On one hand, segmentation is a differentiation process that aims to divide all buyers in
the market into groups by focusing on the differences in their needs and resources with respect to
the company’s offering. The process of differentiation is illustrated in the left part of Figure 1,
whereby a (mass) market in which customers viewed as being similar in their needs and
resources is divided into three (homogeneous) segments such that customers in each segment are
similar to one another and at the same time different from those in the other segments. On the
other hand, segmentation is an agglomeration process that aims to group individual buyers into
segments by focusing on the similarities in their needs and resources with respect to the
company’s offering. The process of agglomeration is illustrated in the right part of Figure 1,
whereby an idiosyncratic market in which customers viewed as having unique needs and
resources are grouped into three (homogeneous) segments, such that customers in each segment
are similar to one another and at the same time different from those in the other segments. Thus,
even though differentiation and agglomeration are opposite processes, they aim to achieve the
same goal—facilitate the process of identifying target customers—and yield the same outcome.

Figure 1: Segmentation as a Process of Differentiation and Agglomeration

Segmentation enables companies to streamline their activities by developing offerings for

groups of customers with similar needs. The key benefit of segmentation is in allowing the
company to optimize marketing expenditures by grouping customers who are likely to respond in
a similar fashion to the company’s offerings. However, because grouping customers inevitably
ignores the individual differences within each group, segmentation might decrease the
attractiveness of the company’s offering by not fully customizing the offering to fit the needs of
individual customers. The key drawback of segmentation is that grouping customers into
segments might not take into account potentially important differences that exist among
customers within each segment. Thus, segmentation can increase the cost efficiency of targeting
but also might decrease its effectiveness.

A common misperception is that the selection of target customers starts with dividing
customers into segments and deciding which segments to target only after market segments have
been identified. This is a myopic view because the main purpose of segmentation is to facilitate
targeting, and without taking into account the logic of the company’s targeting efforts one is
likely to segment the market in a way that is unrelated to the subsequent targeting decision.
Although for presentation purposes segmentation typically precedes targeting, from a conceptual
standpoint, segmentation and targeting are an iterative process of identifying target customers.
Thus, segmentation is targeting-specific, meaning that markets are segmented in a way that
facilitates targeting, and targeting is segment-driven, meaning that a
segment must already be defined in order to be selected as a target.

Because segmentation aims to facilitate targeting, two types of segmentation processes

can be distinguished: value-based segmentation for the purposes of strategic targeting and profile
based segmentation for the purposes of tactical targeting. These two types of segmentation and
the corresponding targeting decisions are illustrated in Figure 2.
Figure 2: Segmentation and Targeting: The Big Picture

Strategic segmentation groups customers based on the company’s ability to create and capture
value from these customers, while ignoring the irrelevant differences among customers within
the same segment. Strategic segmentation lays the ground for strategic targeting, which involves
selecting one (or more) of the identified segments that the company will serve by developing
target-specific offering(s). Following strategic targeting, tactical segmentation involves grouping
customers who have already been identified as strategic targets into segments based on their
profile characteristics—demographics and behavior—in a way that facilitates the company’s
tactical targeting. Building on the tactical segmentation, tactical targeting identifies the specific
channels to be used to reach target customers in order to communicate and deliver the offering.

Lesson No: 3
Lesson Title: Differentiation and Positioning

Let’s Read:

Product Differentiation
Product differentiation is marketing strategy whereby businesses attempt to make their product
unique to stand out from competitors. Businesses do this to gain an edge in industries where
multiple competitors produce similar products. There are other methods business can employ to
gain that edge. Like pursuing a low-cost strategy and advertising, but while those are legitimate
marketing strategies, they are different from product differentiation. Product differentiation
means that some feature, physical attribute, or substantive difference exists between a product.

With so many brands and so many varieties of products and so much advertising noise, it
becomes very difficult but ultimately very necessary to differentiate your brand from
competition. Thus, differentiation strategy is being used by all top companies for their products.
There are various ways to differentiate your product via using a differentiation strategy such as
innovation/invention, product-level differentiation strategy, price differentiation strategy,
branding, packaging, service pre-sale and post-sale, point of customer interaction, user
convenience, & variety of products.

Innovation/Invention
The best way to implement differentiation strategy is to invent or innovate. By innovating or
inventing, you become the market leader because your product is the first entrant in the market.
Inventions are of course difficult and require regular R&D expenditure. But innovations are more
practical and a differentiation strategy used by technological companies like Apple and Google.
Product-level Differentiation Strategy
Observed in many industries, differentiation strategy can be executed at product level too. Taking
an example of the tourism industry, tour packages of all companies are different and the tour
package might have its own differentiating factors. Some might be giving international tours
whereas others will be giving national and regional tours only. Thus, by incorporating product
differentiation strategy at product level, the brands can use differentiation strategy themselves
from competitors in the eyes of the customers.

Price Differentiation Strategy

The most use form of differentiation strategy in price differentiation. In the above examples of
tour packages, some brands might give luxury package whereas other brands might give a cheap
and affordable pricing. Mobile handset companies like Samsung and Apple target the cream
segment whereas companies like Micromax and Xolo target the price sensitive segment. Price
segmentation is the biggest differentiation weapon in the hands of the marketers.

Branding
Your promotion mix and marketing communications of the company play a crucial role in the
differentiation strategy of your product. Companies like Pepsi and Coke rely heavily on their
branding efforts to convert the customers to their products. Thus, youngsters will like Pepsi,
young adults will like Thums up, families will like Fanta, and Coke can be an all-time favorite
for everyone. Your promotion mix helps you target the correct segment and hence plays a crucial
role in differentiation strategy.

Packaging
If you go to any publication and ask them what are the critical factors in selling a book, the
publication agency will say that, after the story of the book, the top cover of the book plays a
critical role in the success of the book. In fact, many times, customers might buy a book based on
the top cover. Thus, packaging is important. The same can be seen when you enter a mall and
have 100’s of the shelves with different types of cereals, soaps, shampoos, detergents, etc. at
such a time, the color, the packaging, the taglines, the ease of handling can play an important
role in converting the customer to your brand. The tetrapack introduced by Frooti in the Indian
market was wonderful example of Packaging playing a role in differentiation strategy.

Service Pre-sale and Post-sale

Word of mouth marketing is another product differentiator and all brands targeting a niche
audience know the importance of word of mouth marketing. And how does word of mouth
marketing happen? Through very good pre and post sales service. Ever heard a friend say that
not only does the restaurant serve good food, but the service and ambiance are awesome as well?
That’s the service I am talking of. If your service is beyond customer expectation, then that can
be a big boost to your differentiation strategy.

Point of Customer Interaction

There are Sec A, B and C segment customers. You have to ensure that you take care of all kinds
of customers when they interact with your company. For this, you have to take care of point of
interaction and secure that the customer has a good experience whenever he interacts with the
company. In fact, banks and retail showrooms regularly have audits to ensure that the front-end
staff is polite and helpful to customers because this can be a major point for differentiation. A
service company, which does not have good interactions with the customer will always suffer in
its profits and operations.

User Convenience
The banking industry shows us an example of how user convenience can help you in your
differentiation strategy. The banks differentiate themselves with the type of net banking services
they offer as well as the number of ATM’s that they have in your vicinity. This is an excellent
example of differentiation through user convenience. If you are taking care of user convenience,
the customer will always come back to you. This is the reason why, even though there are so
many big retail outlets in the market, the smaller shops still run well. This is because they give
personalized service to a handful of customers and the customers find it convenient to shop at the
local retail store.

Offer Variety of Products

Another way to implement differentiation strategy is to attack the psychology of the customers.
Many customers will tell you that they picked a brand just because the brand had more variety in
the number of products it offered. A customer, during prospecting, likes to have more variety so
that he finds the right product and can pick that product for himself. Thus, the more variety of
products you offer, the more chances you have of getting a higher positioning in the mind of the
customer and therefore, differentiating yourself from competition. This is a high investment
strategy because you need to invest in a product line, but it is useful and profitable in the long
run.

Product Positioning

Product positioning is a form of marketing that presents the benefits of your product to particular
target audience. Through market research and focus group, marketers can determine which
audience to target on favorable responses to the product.

Product positioning can involve a number of different elements. A product can be positioned in a
favorable way for a target audience through advertising, the channels advertised through, the
product packaging, and even the way the product is priced. For example, market research may
have revealed that the product is popular among mothers. What do they like about the product?
What should be highlighted about the product to attract them? And where should the product be
advertised to reach them? With the answers to these questions, an effective marketing campaign
can be created to send benefit-driven messages to the target audience whether they may be (such
as Facebook, where targeted ads can be purchased based on demographics and interests).
 Module 3

Product Planning for Goods and Services

Module Description
This module discusses the different factors to be considered when doing product planning. These
factors include the elements of product planning, the product itself, branding, packaging,
warranty, and the different classes of products.

Purpose of the Module

This module helps the students learn, internalize, and apply product planning for goods and
services.

Module Guide
 This module must be used by those students who don’t have gadgets or have no internet
connection in their area.
 The answered quizzes or activities must be submitted to the instructor on or before the
specified deadline.
 There must be no erasures when answering the quizzes or activities.
 Contact your instructor if you have questions regarding this module.

Module Outcome
At the end of the module, the students must be able to distinguish between goods and services as
well as know the different elements in product planning.

Module Requirements
At the end of this module, the students must answer and submit a quiz and start creating their
product plan,

Key Terms
Product Planning
Goods Services
Branding
Packaging
Warranty
Product Class
Lesson No: 1
Lesson Title: Elements of Product Planning

Let’s Read

Note: This lesson is retrieved from Product Planning - Meaning, Elements and Importance.
(2020). Retrieved from Money Matters: All Management Articles:
https://accountlearning.com/product-planning-meaning-elements-and-importance

Why is a product important?

A product is a bundle of utilities consisting various product-feature and accompanying

services expected to yield satisfaction or benefits to the buyer. According William J. Santon, A
product is a complex of tangible attributes, including packing, color, price, manufacturer’s
prestige, services and retailers’ prestige and service which the buyer may expect as offering
satisfaction of wants or needs.

The word good is also used frequently to mean product.

It is said that nothing happens in our economy unless there is sale or purchase of a
product. Product is the soul of all our marketing activities. Without a product, marketing cannot
be imagined. Product is a tool in the hands of the management through which it gives life to a
marketing programme. So, the main responsibility of the management should be to know its
product well. In short, the importance of the product can be judged from the following facts:

1. Marketing is the central point for all Marketing Activities

Product is the pivot and all marketing activities revolve around it. Marketing activities, selling,
purchasing, advertisement, distribution, and sales promotion are all useless if there is no product.
It is a basic tool by which profitability of the firm is bargained.

2. Product is the starting point of planning

No marketing program shall be prepared if there is no product because planning for all marketing
activities price, distribution, sales promotion, advertising, etc., is done on the basis of the nature,
quality, and the demand of the product. Product policies decide the other policies.

3. Product is an End
The main objective of all marketing activities is to satisfy the customers. Various policy
decisions are to provide the customers’ benefits, utilities, and satisfaction through a product.
Thus, product is an end (satisfaction of customers) and the producer, therefore, must insist on the
quality, size, etc., of the product so that it may satisfy the customers’ needs. Though low-quality
products are available, their life will be very short as they fail in satisfying the customers’ needs.
Definition of Product Planning
Product planning is to decide a particular product or products which will be produced or
distributed by an enterprise. The object of product planning is to earn maximum profits, to
provide maximum satisfaction to the consumer and to make the best possible exploitation of the
available resources of the enterprise. Some of the important definitions of product planning are
as under:

Product planning determines the characteristics of product best meeting the consumer’s
numerous desires, characteristics that add salability to products and incorporate these
characteristics into finished products.
-Johnson

The planning, direction and control of all stages in the life-cycle of a product from the
time of its creation to the time of its removal from the company’s line of product known as
product planning.
-Mason & Rath

Product planning may be defined as the act of making out and supervising the search,
screening, development and commercialization of new products, the modification of existing
lines and the discontinuance of marginal or unprofitable items.
-Karl H Tietjen

According to William J. Stanton, product planning embraces those activities which enable
producers and middlemen to determine what should constitute a company’s line of products.
Ideally, product planning will ensure that the full complement of a firm’s products are logically
related, individually justifiable items designed to strengthen the company’s competitive and
profit position.

On the basis of analytical study of above definitions, it can be concluded that product
planning involves taking decisions with regard to the following:

- Which products must be produced or distributed by the enterprise?

- Which product must be developed?
- What kind of improvements and developments are required in the product? What kind of
expansion or contraction must be made in the product of the enterprise?
- What must be the quantity of the production?
- What must be the price of the products?

Elements of Product Planning

1. Research prior to production
Before making a decision to manufacture a new product, market research should be carried out
extensively. The company must know beforehand what should be produced and for whom? It
must decide on the characteristics of the product that can meet the requirements of the people.

2. Possibility of production method

What kind of production method would be followed and is it practicable t develop exactly what
the consumer wants? This possibility should also be examined before taking a decision of
producing a new product.

3. Modification in existing lines

The existing producing lines should also be diagnosed to ascertain whether they can be improved
upon to meet the new requirements of the consumer or a new product to be developed. If it is
possible to modify the existing line, then to what extent should it be done?

4. Elimination in the product

Product planning involves the decision of elimination of unprofitable product line so that the
resources may be used to some products profitably.

5. Improvement in the product

Product planning includes decision regarding the improvement of existing product in terms of
quality, packaging, etc., taking into consideration the competitors’ strategies in the market.

6. Price determination
Determining the price of the product is one of the main elements of the planning. Would the price
be fixed based on the basis of the prices of competitors for the same product or on the basis of
cost or production or on the basis of the forces of its demand and supply in the market? This is
an important decision to be taken by the management concerning product planning.

7. Commercialization of product
Product planning includes products commercialization and sale of product which can earn a good
profit for the company on one hand and satisfy the needs of the consumers on the other. It also
provides for the attractive introduction of new products in the market.

8. Coordination
Product planning also attempts to coordinate the various products and their efforts so that the
company can maintain or improve its competitive position. It can be achieved by taking timely
decisions from time to time. Thus, it is clear from the study of various elements of product
planning that every decision from the start of an idea of producing to its execution from the
product line forms the part of the product planning.

Importance of Product Planning

1. Starting Point of Marketing Programme

All the decisions made of an enterprise are directly or indirectly affected by product planning.
For example, if a marketing programme is prepared without considering product planning, it
cannot be expected to be successful. Therefore, it is necessary that product planning must be
completed before preparing marketing programmes.
2. Symbol of Managerial Ability

Product planning is a process which embraces all the other efforts of an enterprise t forecast
different aspects of product planning us as:
 - Can the product satisfy the needs and wants of consumers?
- Can the product face competition?
- Can the consumers pay the price for the product? - Can the enterprise earn desired
profit?
If the reply to all the above questions is affirmative, a decision is taken to produce it, or else, it is
decided otherwise. Therefore, the process or planning is considered a symbol of managerial
ability. If an enterprise does not undertake the process of product planning, it implies managerial
bankruptcy in the organization.

3. To meet Social Responsibilities

It is true that the ultimate objective of every business and industrial enterprise is to earn
maximum possible profits but at the same time it is also true that this cannot be the sole objective
of an enterprise. Every business bears a great deal of responsibility of meeting and fulfilling the
social requirements and expectations. Moreover, the objective of earning maximum profits can
also be achieved only by fulfilling these social expectations. Such fulfilment is possible only
through product planning because the process planning decides upon the nature and
characteristics of products that may fulfill these expectations. Thus, it can be said that product
planning is a tools of meeting social responsibility.

4. Helpful in facing the Competition

Product planning is regarded as a competitive weapon because the success of marketing efforts
of an enterprise depends upon the extent to which its products can face stiff completion in the
market. Many decisions are taken in the process or product planning for improvements and
changes in products so that the challenges in competitive situations may be met successfully.

5. Wide Scope
Product planning is important because many decisions are taken in the process of product
planning. These decisions are – development of a new product, expansion or contraction or
product mix, improvement in the product, determination or brand, label, packing, color, design,
size and price, etc. thus, the scope of product planning is very wide.
The above discussion makes it clear that product planning is of great importance for an
enterprise and the success of all the marketing efforts of the enterprise depends upon it.
Therefore, it can be concluded that product planning is the foundation of the production and
marketing programmes.

Lesson No: 2
Lesson Title: Product: Goods vs Services
Let’s Read
In business, it is common to talk about both goods and services as products of a company.
A good is defined as something tangible, whereas a service is always intangible such as lawyer’s
advice or maintenance of your computer by a professional. However, it is common to talk about
products of a company, and we refer to the product line of a company when describing the goods
and services offered by it. For most of us, goods and product are synonyms to be used
interchangeably.

What are Goods?

It is thus clear that goods are products that are tangible and those that you can hold in
your hands or at least see physically. Goods are products that are sold and bought in a market.
Service part of any product usually begins after the purchase. You buy an air conditioner and
then you are dependent on the services provided by the seller for the maintenance and repair of
the product. The ownership of a good is transferrable. That means, once you buy a good, it
belongs to you. For example, you buy a motorbike. Then, the motorbike belongs to you as the
ownership is transferred to you by the seller. Then, we can look at the customer involvement in
the production of goods. The involvement of the customer in producing goods is very low. For
example, if you take a mobile phone, the company decides how they are going to design it. Sure,
customers can say what features they would like to see in a new phone, but not all those features
are included in the final product. The company decides what is best and produces. The
evaluation of a good is easy. The good is tangible, and you can make a criterion and evaluate a
good according to that.

The word ‘goods’ is more common and popular than products, which is reserved to refer
to the range of goods made by a company. Otherwise it is capital goods, consumer goods, fast
moving consumer goods (FMCG), electronic goods, industrial goods, and so on. Whether you
buy a soap, toothpaste, oil, or shampoo, you are actually buying fast moving consumer goods.
On the other hand, a TV, motor cycle, Washing Machine, hair dryer, oven, computer, laptop,
mobile are all referred to as durable goods. It is seen that whether items or articles produced are
used by end consumers for personal use (such as soap, shampoo, cold drinks etc), or durable
items like TV, DVD player, toaster, iPod etc, (which are experienced by one or many), they all,
are referred to as goods only. One kind of items that are always called goods and never products
are electrical items. Whether it is wire, switches, fans, bulbs, CFL, tube light or any other related
items, they are all electrical goods and not products.

What are Services?

On the other hand, services are mostly intangible and, in most cases, cannot be seen in physical
form. In simple word, services denote an act of doing something for someone. However, the
ownership of the service is not transferable. For example, think that you buy a train ticket. That
does not mean the train belongs to you. It simply means you get to use the service provided by
the train. That is it. No ownership is transferred. When it comes to customer involvement, in
services customers are more involved. For example, think about an ATM machine. ATM machine
needs customer’s full participation to provide its service. Evaluation of different services is
difficult. Different individuals or companies who provide the same service may provide it using
different methods. So, having one criterion to decide whether a service is good or not, is hard.
For example, take two barber shops. One barber shop has all the new equipment. The other does
not. However, both get the same amount of customers. So, the service must be good in both.
Nevertheless, you cannot make a common criterion to evaluate both.
What is the difference between Goods and Services?
 Goods are tangible while services are intangible.
 The quality of goods, once produced, does not vary. However, the quality of services is
dependent upon the service provider and may vary greatly.
 You own goods, but utilize services.
 The ownership of goods is transferable. The ownership of services is not transferable.
 The customer involvement in services is remarkably higher than in goods.
 Evaluating goods is easier than evaluating services.
 Goods have inventories. These inventories show how many goods were there, how many
sold and how many remain. However, services do not have inventories as a service is
provided only upon request. So, the production process begins with the order.
 Time is more important in services than in goods. This is because, in a service,
production and consumption happens at the same time. If the service is late, that is a
delay. Goods do not have this problem as they are already produced.
 Services have impact on the sale of goods, but goods cannot affect the sale of services.

Source: Koshal. (2011, June 8). Difference Between Goods and Services. Retrieved from
DifferenceBetween.com: https://www.differencebetween.com/difference-betweengoods-and-vs-
services/

Products
Coming to the term product, have you ever heard of financial goods? No, there are only financial
products just as there are petroleum products, and not petroleum goods. Again, there are nutrition
products and healthcare products, and not healthcare goods. When a bank manager talks about
insurance policies being offered by it or different types of loans that the bank is providing to the
needy, it is actual talking about the range of financial products it has to serve the people of the
country. We talk about farm produce or products that we get from a farm. Similarly, there are
poultry products and not poultry goods. The word ‘product’ has another usage and that is to refer
to a person as a product of a particular college or university. He is a product of Cambridge
University and it seems perfectly normal to talk this way. It is also used to refer to excretion by
human beings and animals as waste products. Ever wondered why it is never waste goods?

Lesson No: 3
Lesson Title: Branding

Let’s Read
How do you “brand” a product? Although firms provide the impetus to brand creation through
marketing program and other activities, ultimately a brand resides in the minds of consumers. It
is a perceptual entity rooted in reality but reflecting the perceptions and idiosyncrasies of
consumers.

Branding is endowing products and services with the power of a brand. It’s all about creating
differences between products. Marketers need to teach consumers “who” the product is – by
giving it a name and other brand elements to identify it – as well as what the product does and
why consumers should care. Branding creates mental structure that help consumers organize
their knowledge about products and services in a way that clarifies their decision making and, in
the process, provides value to the firm.
The increased commoditization in many categories has shifted the focus of differentiation from
products and services to brands. Brands help differentiate the offering in two main ways: by
creating a unique brand identity and by associating the brand with a meaning that resonates with
its potential buyers.

Brand identity includes the identifying characteristics of the brand, such as brand name, logo,
symbol, character, slogan, jingle, product design, and packaging. Brand identity elements should
be unique, memorable, likeable, and consistent with the other brand elements and with the
meaning of the brand. Brand elements should also be flexible to adapt to changes in the market
environment (to accommodate shifts in consumer preferences) and the company’s product-line
strategy (to be extendable to other product categories). Furthermore, the company should be able
to protect the uniqueness of its brand elements against infringement by competitors.

Brand meaning reflects the brand-related perceptions and beliefs held by the buyers; it reflects
buyers’ understanding of the value proposition associated with a particular brand. The meaning
of the brand has a tripartite impact on customers’ perceptions of value. First, it can signal the
quality of the products and services associated with the brand. For example, brands such as Tide,
Tylenol, and Michelin are commonly associated with quality products. Second, brands can signal
the price image of the offering, indicating the monetary savings that are likely to be associated
with the brand. For example, Walmart, Costco, and Aldi brands are often associated with low
prices. Finally, brands can create additional emotional (satisfaction from using and owning the
brand), social (group acceptance resulting from ownership of a particular brand), and self-
expressive benefits (use of the brand as a means to express one’s identity). For example, Rolls-
Royce, Louis Vuitton, and Tiffany’s signify social status, and Harley-Davidson, Oakley, and
Abercrombie & Fitch are associated with unique self-expressive values.

The primary function of brand identity is to identify the company’s offering and differentiate it
from the competition by creating value that goes beyond the product and service characteristics
of the offering. To illustrate, the identity of BMW is captured by elements such as its distinct
name and logo, whereas its meaning – the ultimate driving machine – reflects the mental
associations that target customers make with the brand. A brand’s meaning exists in the minds of
the buyers.

Lesson No: 4
Lesson Title: Packaging

Let’s Read
Note: This lesson is retrieved from Joshi, M. (2012). Essentials of Marketing.

The packaging of a product is an important part of the marketing plan. A good number of
companies make square packages in place of round packages which switch space. Packaging
means wrapping of goods before they are transported or stored or delivered to a consumer.
Packaging is part of the packing function of marketing. It is one among the activities of
designing and producing the container or wrapper for a product. The wrapper or the container is
called package.

Packaging as a Marketing Tool

The following are the factors which influence the growth of packaging as a marketing tool:

 Self-service: A number of products are sold through the supermarket in a self-service

basis. Thus, they are packed and kept ready for sale. Packages attract attention, telling
product features, create the overall impression and win consumers’ confidence. So good
packaging is a must.

 Consumer interest: Consumers are willing to pay a little more for convenience,
appearance and dependability of better packages.

 Company and brand image: To provide special attractions, there must be a good brand
and package.

Functions of Packaging

 Product protection: Packages protects the products. Their journey from manufacturer to
consume is made easy. Package prevent breakage, chemical change, insect attack, etc.

 Product containers: Package means using just the space in which a product will be
contained. Ordinarily, packing is in the form of throw-away containers.

 Product attractiveness: The size and shape of the package, its color, printed matter on it,
etc. must make the package attractive to look at. Generally, consumers feel that a good
package contains good quality product.

 Product identification: Packages differentiate similar products. Packaging and labeling

are closely related to branding. Package has a great importance when the product cannot
be seen by the buyer – packed milk, fruit juice, etc. Buyers depend on the package label
in understanding the product in the package. An attractive label is a means of success in
marketing.

 Effective sales tool: A good package is more likely to increase sales. An attractive
package invites customers. Packaging has another value as a large number of people buy
the products for their containers.

Lesson No: 5
Lesson Title: Warranty
Let’s Read
A warranty is a promise by the seller that an offering will perform as the seller said it would.
There are only two types of warranties that are honored in the Philippines – the express and
implied.

The express warranty, which is an oral or written statement by the seller regarding how
the product should perform and the remedies available to the consumer in the even the offering
fails. The express warranty indicates the exact terms, date, and time of warranty (example:
January 2011).

An implied warranty is an obligation for the seller to provide an offering of at least

average quality, beyond any written statement. For example, when you buy a new car, there is an
implied warranty that it will run as promised after you drive it off the lot. You also have the right
to expect average quality for any characteristic of a product that you buy online, except for those
characteristics specifically described in the online material. If you were able to inspect the
product before you bought it, such as looking at it in a store, the implied warranty on applies to
those aspects you couldn’t inspect or observe in the store.

The basic warranty as stated by Philippine law is set to a minimum time frame of six
months and a maximum time frame of one year. In order to aval of the warranty, a consumer
must present an original receipt, a sticker label with a serial number of the product, or a warranty
card, especially when it comes to gadgets like computers and cellphones. Consumers must be
aware of their 3 basic consumer rights: Right to Repair, Right to seek Replacement and Right to
Refund.
International warranties are honored in the Philippines. As long as the product is brand new and
original, consumers with defective products can go to the nearest authorized selling center.
Products from “tiangge” or similar establishments which do not issue official receipts do not
come with warranty service. However, inevitable disputes with such businesses can be easily
settled through proper mediation.

There’s such thing as in-house warranty (example: 7-day warranty) offered by

companies. This type of warranty is an independent service given by a company out of
generosity. In-house warranties give consumers 7 days to return a product for whatever reason.
However, this guarantee causes confusion as it misleads the public from the law-imposed
warranties.

In some instances, some stores have a “no return, no exchange” policy. According to
Republic Act 7394 or the Consumer Act of the Philippines, such policy is not allowed at any
business establishment as it gives consumers the wrong impression that they have no right to
return defective or damaged goods. Still, consumers can’t return an item because of a change of
mind; furthermore, the return and exchange policy won’t accept returns if the damage is caused
by the customer.
If any consumer encounters a store that practices the “no return, no exchange” policy,
they can file a complaint addressed to the appropriate provincial office of DTI with the name and
address of complainant and the shop or person to report. The transaction date, time, and place
should also bring the product bought (most preferred sealed), photocopy of the receipt issued,
brochure advertising the product, and the like.
 The Consumer Act also lists prohibited acts, one which is the refusal of the manufacturer
or any person obliged to grant a warranty without any valid or legal reasons. Other prohibited
acts include the unreasonable delay by the manufacturer or the person obligated under the
warranty card, and false representation in advertisement as to the existence of a warranty.

Lesson No: 6
Lesson Title: Classes of Products

Let’s Read
Note: This lesson is retrieved from Bhasin, H. (2018, May 27). Concept of Product Class.
Retrieved from MARKETING91: https://www.marketing91.com/product-class/

Concept of Product Class

To understand the concept of Product Class, it becomes essential to first understand what exactly
a “product” is. A product can be defined as anything that is offered to a market for consumption.
The product can be of any kind (tangible or intangible) and is offered to satisfy a need. The key
to remember here is that a product is basically a need-satisfying offering.
In marketing circles, it is a commonly known fact that a large majority of products go beyond
just needing satisfying. Business try to infuse several inputs to the “basic need satisfying
product” and thus move beyond just meeting the needs of the consumers. By adding advanced
functions and features, convenient and attractive packaging and other fancy frills, the final
product that is offered to the consumers goes much beyond the basic needs.
A product may finally serve different purposes, take different form and serve different types of
buyers. Since products can be of various kinds, it becomes pragmatic to divide different kinds of
products into similar classes so that it becomes easier for businesses to draft suitable strategies
that would govern products grouped in the same class.

Definition of “Product Class”

A product class is a group of similar products which can somewhat substitute each other. The
products in the same class have similar feature and functions and are catered to the same
demographic consumer. Product class can be broad or narrow.
Narrow product class consists of products that include a definite set of products used for a
specific purpose. An example would be body-cleaning products such as shower gels, body
washes and soaps. On the other hand, cleaning products would come under broad product class
and would include detergents, utensil, washing gels, shampoo, body washes and others.

Different kinds of Product Class

Traditionally, products – based on their use – were broadly classified into consumer
products and industrial products. However, with changing times, these two product classes have
been divided further. Let us discuss the classes that products are divided into today.
1. Consumer Goods/Products
Consumer products referred to all those products that were meant for personal use or direct
consumption by the consumer. Based on the shopping habits of the target consumer, consumer
goods are further classified as:
a. Convenience goods
 Products that are often purchased by the consumer and do not need much forethought or
effort on the part of consumers are called convenience goods. Such goods are consumed often
and thus are purchased immediately with minimum effort. Examples of convenience goods are
Newspapers and most of the FMCG (fast moving consumer goods) products such as food staple.
Toiletries and others. Convenience goods can be further classified as:
 Staple Goods – products that are purchased routinely and at specific intervals
come under this category. Examples would be food staples and toiletries.
 Impulse Goods – these are products that are not routine buys. Though consumers
buy it as impulse, they do not put in much effort to evaluate them. Example would
be buying chocolate.
 Emergency Goods – these are products that are purchased during the emergency.
Though there was no decision to buy these products, the consumer is forced to
buy these because of an emergency. Examples would be medicines during an
illness.
b. Shopping Goods
These products are planned purchases where a consumer evaluates various brands –
based on price, features offered and other traits – and then makes the decision. Unlike the
purchase of convenience goods, shopping goods involve considerable expenditure and thus
consumers are ready to invest effort and time comparing shopping products before making the
final decision. Examples of shopping goods would be the purchase of clothing, home furnishings
and furniture. Shopping goods can further be classified into:
Homogeneous Shopping Goods – these are products that are similar in quantity and feature and
differ in price. Since these offer similar features but have different prices, consumer’s price
comparison is justified. An example here would be Top Wear the for women. Since the features
are similar in top wear, a consumer compares the price, fabric and brand value before making the
decision.

Heterogeneous Shopping Goods – these are products that differ in features and services.
Consumers evaluate these products on their features and services and not on their price. The
example here would be a purchase of a front-loading washing machine. Since different brands
offer different features in top loading washing machines, consumers compare these on their
features before making the decision.

Specialty Goods. These are goods for which consumers need to make the considerable effort
before making the purchase. The products have unique feature and brand characteristics and thus
consumers do not compare between different brands. Rather, they might compare between
different models of the same product in the same brand. An example here would be a purchase of
Maruti car. The consumer, having decided on purchasing a Maruti car will only compare the
different models of Maruti.

Unsought Goods. These are product that the consumer is unaware of and thus has no intention
od buying. Products such as Mutual funds or Life Insurance come under this kind and need to be
advertised to entice consumers.

2. Business Goods/Industrial Products

These are products that are used to manufacture other products. They can be used as raw
materials, spare parts, capital supplies or consumables. Business goods are further classified as:
 a. Materials and Parts
As the name suggests, these goods are used as raw materials for the production of goods
or enter the business as manufactured materials or as component parts. Examples of raw
materials would be cotton that is used to manufacture fabric. Manufactured materials are
component materials such as iron or zinc that are used to manufacture other products.
Component parts, such as integrated circuits, are products that enter the final product without
being changed.

b. Capital Items
These are long-lasting goods that assist developing or managing the finished product.

c. Supplies and Business Services

These are products that facilitate developing or managing the finished product supplies.
This category is further divided into operating supplies such as writing papers and maintenance
and repair products such as painting.

Module 4

Product Development

Module Description
This module discusses the product life cycle, new product development, and the process on
developing new products.

Purpose of the Module

This module helps the students understand product life cycle and develop new products.

Module Guide
 This module must be used by those students who don’t have gadgets or have no internet
connection in their area.
 The answered quizzes or activities must be submitted to the instructor on or before the
specified deadline.
 There must be no erasures when answering the quizzes or activities.
 Contact your instructor if you have questions regarding this module.

Module Outcomes
At the end of the module, the students must be able to understand the product life cycle and
explain the different characteristics and marketing strategies for each stage.
Module Requirements
At the end of this module, the students must answer and submit a quiz and continue creating their
product plan,

Key Terms
Product Life Cycle
New Product Development
New Product Development Process

Lesson No: 1
Lesson Title: The Product Life Cycle

Let’s Read

Note: This lesson is retrieved from Olsen, E. (n.d.). Strategic Planning: The Cycle of (Product)
Life.
Retrieved from Dummies: https://www.dummies.com/business/business-strategy/strategic-
planning-the-cycle-ofproduct-life/

Strategic Planning: The Cycle of (Product) Life

Form a strategic perspective, looking at where your product or service is in its life cycle
helps determine actions in each of the Four Ps (product, price, promotion, and place) related to
your target customer.
The following are the four product life cycle phases:

 Introduction: This phase provides a period of slow growth with nonexistent profits
(because of the extensive promotional costs). Examples include third-generation mobile
phones, e-commerce, and iris-based personal identity cards.

 Growth: Growth is a period of rapid market acceptance and developing profits. Some
examples of growth are MP3 players, e-mail, breathable synthetic fabrics, and smart
cards.

 Maturity: This phase is a period of slow growth, level profits, and increasing marketing
expenditures to defend the product’s position against competitors. Examples of maturity
include personal computers, faxes, cotton T-shirts, and credit cards.

 Decline: Decline is a period of falling sales and profits. Examples include handwritten
letter, checkbooks, and CD players.
The figure provides an example to help you develop actions for each of the Four Ps. Depending
on where your product is in the product life cycle. For each target customer, follow these steps:

1. Determine your marketing goal for the target customer group.

2. Determine what phase of the product life cycle your product or service is in.
3. Develop an action plan that addresses product price, promotion, and distribution.

REMEMBER
You may not need to take
a specific action for each
of the Four Ps. But write
down what’s happening so
you can ensure the
marketing mix works
cohesively.

L
esson No: 2
Lesson Title: New Product Development

Let’s Read
Note: This lesson is retrieved from Business Queensland. (2016, June 16). New Product
Development.
Retrieved from Queensland Government: Business Queensland:
https://www.business.qld.gov.au/running-business/growing-business/becominginnovative/
developing-products/new-products

New product development (NPD) is the process of bringing a new product to the marketplace.
Your business may need to engage in this process due to changes in consumer preference,
increasing competition and advances in technology or to capitalize on a new opportunity.
Innovative businesses thrive by understanding what their market wants, making smart product
improvements, and developing new products that meet and exceed their customers’ expectations.

‘New products’ can be:

 Products that your business has never made or sold before but have been taken to
market by other.
 Product innovations created and brought to the market for the first time. They
may be completely original products, or existing products that you have modified
and improved.

NPD is not limited to existing businesses. New businesses, sole traders or even freelancers can
forge a place in the market by researching, developing and introducing new or even one of
products. Similarly, you don’t need to be an inventor to master NPD. You can also consider
purchasing new products through licensing or copyright acquisition.

Lesson No: 3
Lesson Title: New Product Development Process

Let’s Read
Note: This lesson is retrieved from Lumen. (n.d.). The New-Product Development
Process.
Retrieved from Lumen: Introduction to Business: https://courses.lumenlearning.com/wm-
introductiontobusiness/chapter/the-newproduct-development-process/
There are probably as many varieties of new product development systems as there are
types of companies, but most of them share the same basic steps or stages – they are just
executed in different ways. Below, we have divided the process into eight stages, grouped into
three phases. Many of the activities are performed repeatedly throughout the process, but they
become more concrete as the product idea is refined and additional data are gathered. For
example, at each stage of the process, the product team is asking. “Is this a viable product
concept?” but the answer change as the product is refined and more market perspectives can be
added to the evaluation.

Stage 1: Generating New Product Ideas

Generating new product ideas is a creative task that requires a particular way thinking.
Coming up with ideas is easy, but generating good ideas is another story. Companies use a range
of internal and external sources to identify new product ideas. A SWOT Analysis might suggest
strengths in existing products that could be the basis for new products or market opportunities.
Research might identify market and customer trends. A competitive analysis might expose a hole
in the company’s product portfolio. Customer focus group or the sales team might identify unmet
customer needs. Many amazing products are also the result of lucky mistakes – product
experiments that don’t meet the intended goal but have an unintended and interesting application.
For example, 3M scientist Dr. Spencer Silver invented Post-It Notes in a failed experiment to
create a super-strong adhesive.
 The key to the idea generation stage is to explore possibilities, knowing that most will not
result in products that go to market.
 lOMoARcPSD|26754767

PRODUCT MANAGEMENT – MKTG 3. /

MKTG 7
Stage 2: Screening Product Ideas
The second stage of the product development process is idea screening. This is the first of
many screening points. At this early stage much is not known about the product and its market
opportunity. Still, product ideas that do not meet the organization’s overall objectives should be
rejected at this stage. If a poor product is allowed to pass the screening stage, it wastes effort and
money in later stages until it is abandoned. Even more serious is the possibility of screening out
a worthwhile idea and missing a significant market opportunity. For this reason, this early
screening stage allows many ideas t move forward that many not eventually go to market.
At this early stage, product ideas may simply be screened through some sort of internal
rating process. Employees might rate the product ideas according to a set of criteria, for example;
those with low scores are dropped and only the highest ranked products move forward.

Stage 3: Concept Development and Testing

Today, it is increasingly common for companies to run some small concept test in a real
marketing setting. The product concept is a synthesis or a description of a product idea that
reflects the core element of the proposed product. Marketing tries to have the most accurate and
detailed product concept possible in order to get accurate reactions from target buyers. Those
reactions can then be used to inform the final product, the marketing mix, and the business
analysis.
New tools leveraging technology for product development are available that support the
rapid development of prototypes which can be tested with potential buyers. When concept
testing can include an actual product prototype, the early test results are much more reliable.
Concept testing helps companies avoid investing in bad ideas at the same time helps them catch
and keep outstanding product ideas.

Stage 4: Business Case Analysis

Before companies make a significant investment in a product’s development, they need to
be sure that it will bring a sufficient return.
The company seeks to answer such questions as the following:
1. What is the market opportunity for this product?
2. What are the costs to bring the product to market?
3. What are the costs through the stages of the product life cycle?
4. Where does the product fit in the product portfolio and how will it impact existing
product sales?
5. How does this product impact the brand?
6. How does this product impact other corporate objectives such as social responsibility?
The marketing budget and costs are one element of the business analysis, but the full scope of the
analysis includes all revenues, costs, and other business impacts of the product.
Stage 5: Technical and Marketing Development
A product that has passed the screening and business analysis stages is ready for technical
and marketing development. Technical development processes vary greatly according to the type
of product. For a product with a complex manufacturing process, there is a lab phase to create
specifications and an equally complex phase to develop the manufacturing process. For a service
offering, there may be new processes requiring new employee skills or the delivery of new
equipment. These are only two of many possible examples, but in every case the company must
define both what the product is and how it will be delivered to many buyers.
While the technical development is under way, the marketing department is testing the
early product with target customers to find the best possible marketing mix. Ideally, marketing
uses product prototypes or early production models to understand and capture customers
responses and to identify how best to present the production to the market. Through this process,
product marketing must prepare a complete marketing plan – one that starts with a statement of
objectives and ends with a coherent picture of product distribution, promotion, and pricing
integrated in a plan of marketing action.

Stage 6: Test Marketing and Validation

Test marketing is the final stage before commercialization; the objective is to test all the
variables in the marketing plan including elements of the product. Test marketing represents an
actual launching of the total marketing program, done on a limited basis.
Initial product testing and test marketing are not the same. Product testing is totally initiated by
the producer: he or she selects the sample of people, provides the consumer with the test product,
and offers the consumers some sort of incentive to participate.
Test marketing, on the other hand, is distinguished by the fact that the test group represents the
full market, the consumer must make a purchase decision and pay for the product, and the best
test product must compete with the existing products in the actual marketing environment. For
these and other reasons, a market is an accurate simulation of the broader market and servs as a
method for reducing risk. It should enhance the new product’s probability of success and allow
for final adjustment in the marketing mi before the product is introduced on a large scale.

Stage 7: Launch
Finally, the product arrives at the commercial launch stage. The marketing mix comes
together to introduce the product to the market. This stage marks the beginning of the product
life cycle.

Stage 8: Evaluation
The launch does not in any way signal the end of the marketing role for the product. To
the contrary, after launch the marketer finally has real market data about how the product
performs in the wild, outside the test environment. These market data initiate a new cycle of idea
generation about improvements and adjustments that can be made to all elements of the
marketing mix.
 Module 5

Intellectual Property

Module Description
This module discusses the importance of intellectual property in developing new products, know
how to check product novelty, patent drafting, and patent application.

Purpose of the Module

This module helps the students understand intellectual property and its application.

Module Guide
 This module must be used by those students who don’t have gadgets or have no internet
connection in their area.
 The answered quizzes or activities must be submitted to the instructor on or before the
specified deadline.
 There must be no erasures when answering the quizzes or activities.
 Contact your instructor if you have questions regarding this module.

Module Outcomes
At the end of the module, students must have understood the importance of intellectual property
and the law governing it, known how to identify product novelty, and started drafting patent
application.

Module Requirements
At the end of this module, the students must answer and submit a quiz and draft a patent
application.
Key Terms
Intellectual Property
Patent
Product Novelty

Lesson No: 1
Lesson Title: Importance of Intellectual Property

Let’s Read
Note: This lesson is retrieved from Burnett, C. (2019, January 22). AA Thornton Intellectual
Property Law: The Importance of Intellectual Property. Retrieved from Lexology:
https://www.lexology.com/library/detail.aspx?g=0b676aa6-7a3b-4bcb-8570-ccb90699eeef

Every business will have some form of Intellectual Property (IP) – not just those deal with
technology. To appreciate the importance of this IP, it is necessary to understand the nature of
different IP rights, what they protect, and how the right can be obtained and how they best be
commercialized.

Generally speaking, IP can be seen as a bundle of property rights that protect “creations
of the mind”. These rights can be crucial for your business, as not only can they be used to
protect your own creations, but also provide useful business tools that can be exploited
commercially.
Different forms of IP may be used to protect different aspects of your business. Not all IP
rights may apply to your particular field of business, but many will, and understanding not only
your rights but those of your competitors will put you on a sound commercial footing.
The first group of rights below are all obtained through a registration process, and the costs,
timescales and procedures for each will vary.
Brand names and logos, whether they be the name of your business, the name of any
products you produce or any associated services, can all be protected by way of a trade mark
registration.
Innovative products and methods of manufacture may be protected by way of a patent.
Whereas patents may protect the way something works, or the way it is made, the visible
appearance of these products may be protectable by way of a registered design.
 Whilst registered trademarks and designs and patents all need to be obtained through a
legal procedure (with associated expense), other rights are automatically obtained, and can also
be used to protect your intellectual creations.
Copyright exists to protect the expression of ideas, and protect original written works
(including computer code), as well as works of art including drawings, sculptures and
photographs. The design of products is also protectable by an unregistered design right, but this
offers weaker protection than a registered design.
There is also limited protection for names, logos, trade style and other indicia associated
with your business, if it can be proved that you have sufficient goodwill and reputation for those
indicia.

It is also important to be aware of your confidential information and trade secrets, since
action can be taken if this information is disclosed without permission.
IP rights can be put to use in a number of different ways. On one hand, IP may be seen as
a negative right. That is, it can merely be used to prevent others from copying your written
material, or producing products that infringe upon your patents and designs. From this, you
maintain a competitive edge.
On the other hand, IP can be used in a positive sense. Since IP is a property right, it can
be bought and sold. It can be licensed, so that others can use your brand name or make products
that fall within your patent, for which you will receive a royalty payment. IP can be used to give
you the upper hand in negotiations, and can be exchanged for mutual benefit.
Furthermore, IP rights can be obtained globally, unleashing your businesses potential to a
global market.
It must also be borne in mind that not only is your IP important, so is that of others. You
will need to be aware of competitors’ rights so that they are not infringed, which could put your
own business at risk.
Lesson No: 2
Lesson Title: Product Novelty

Let’s Read
Note: This lesson is retrieved from Bhatti, A. W. (2017, October 2). Retrieved from World
Intellectual Property Organization (WIPO):
https://www.wipo.int/edocs/mdocs/mdocs/en/wipo_ip_cnx_17/wipo_ip_cnx_17_3.pdf

Novelty
An invention is new/novel if it was not known to the public before the date of filing of
the patent application or the priority date claimed.
Prior art should not be patented again!

Absolute Novelty
No publication of the invention anywhere in the world by means of written or oral
description, by use, or in any other way.
Also known as strict novelty requirement
Each feature of the invention in general in one single reference
Some national laws have a grace period e. g. USA, Japan, etc. but not European countries!
Prior art must contain all features of the patented invention.

Example:
Invention = wooden chair with seat and four legs with two rails (a rocking chair)
Reference X: wooden chair with seat and four legs
Reference Y: chair with four legs with two rails
Is this invention novel?
Invention is novel.
Why?
Reference X and Y do only disclose features of the invention together!
But invention may be obvious!

Lesson No: 3
Lesson Title: Patent Drafting

Let’s Read
Note: This lesson is retrieved from UpCounsel. (n.d.). Patent Drafting: Everytihing You Need to
Know. Retrieved from UpCouncel: https://www.upcounsel.com/patentdrafting

Patent drafting is the process of writing the patent description and claims. When the
patent is issued, the draft is the specification part of the document.
What is Patent Drafting?
Patent drafting is a part of how to patent an idea and is the process of writing the patent
description and claims. It is at the core of every patent application. When the patent is issued or
allowed, the draft serves as the specification part of the document.
Often an inventor wants to complete the patent drafting process by providing an essay or
a business plan that outlines the invention. Unfortunately, documents like these are of limited
use. Journal articles usually state that the invention is consistent with accepted science. This goes
against the grain of what patenting accomplishes. In this case, the goal is to point out that the
work is not an apparent continuation of current accepted wisdom.
A business plan is also the wrong for a patent application. A project or business plan
focuses on what will be done. It may describe the results the company hopes to achieve with the
invention. This future-oriented way of presenting the invention is not helpful. When drafting a
successful patent application, the focus is on what has already been established.
The technical aspects required of a patent draft also make a business plan or journal
article unusable. The detail necessary for a patent draft would be overkill for either of the two
documents discussed. Finally, drawings and illustrations in a journal article and a business plan,
generally do not meet the criteria for a patent draft.

Steps to Drafting a Patent

1. The inventor to fill out an invention disclosure form.
2. After reviewing your invention disclosure form, the patent attorney schedules a meeting to
make certain they fully understand the technology, idea, or process you to license. (Note: An
inventor can write his own patent.)
3. Creating sketches and drawings
4. Drafting the patent description finalizes the claims and figures.
5. Once all other parts of the patent application are ready, the “abstract” is written.
6. Before the patent application is filed, the draft is ready for you to read. Review it thoroughly
before signing off on the finished draft.
7. The process of patent drafting is long and arduous. While it is possible to achieve patenting
without an attorney, it not advised. There are many pitfalls and dangers associated with
patents issued without proper documentation. The failure rate of patent issuance increases
drastically without the help of a lawyers.

Lesson No: 4
Lesson Title: Patent Application

Let’s Read
Note: This lesson is retrieved from Intellectual Property Office of the Philippines. (n.d.). Patent
Application. Retrieved from Intellectual Property Office of the Philippines:
https://www.ipophil.gov.ph/services/patent/filing/
PATENT APPLICATION
Patent Search
Before applying for grant of a patent, knowing existing patent documents can save you time and
effort. Search for granted patents, patent applications, and pending patents.
Step 1. Fill out three copies of the Patent Application Form. (Check the website above.)
Step 2. Attach the following:
1. Specification and description of the patent
a. The Title b. A brief statement of its nature and purposes
c. Brief explanation of the drawings, if any d. Complete and detailed enabling description
e. Distinct and explicit claim or claims which the applicant seeks to be protected f. Abstract of
the invention
2. Drawings of the invention
Step 3. Submit the documents & pay the following fees to the IPOPHL cashier.

Philippine Laws on Intellectual Property

R.A. 8293 - An Act prescribing the Intellectual Property Code and Establishing the Intellectual
Property Office, providing for its powers and functions, and for other purposes.
R.A. 165 - An Act creating a patent office, prescribing its powers and duties, regulating the
issuance of patents, and appropriating funds therefore.
R.A. 166 - An Act to provide for the registration and protection of trade-marks trade-means, and
service marks, defining unfair competition and false marking and providing remedies against the
same, for other purposes.
Presidential Decree No. 49 - Decree on the protection of intellectual property .
 Module 6

The Financial Side of Product Management

Module Description
This module discusses the classification of cost, analysis of financial statement, pricing of
products and services.

Purpose of the Module

This module helps the students apply and understand the financial side if product management.

Module Guide
This module must be used by those students who don’t have gadgets or have no internet
connection in their area.
The answered quizzes or activities must be submitted to the instructor on or before the specified
deadline. There must be no erasures when answering the quizzes or activities.
Contact your instructor if you have questions regarding this module.

Module Outcomes
At the end of the module, students must have understood the financial considerations in product
management, explained the different pricing strategies, and explained its appropriateness in
doing business.

Module Requirements
At the end of this module, the students must answer and submit a quiz.

Key Terms

Cost
Pricing
Financial Statement Analysis
Break-even Analysis
Lesson No: 1
Lesson Title: Classifications of Cost

Let’s Read

Note: This lesson is retrieved from Bragg, S. (2020, May 24). Cost Classification. Retrieved
from Accounting Tools: https://www.accountingtools.com/articles/costclassification.html

Cost classification involves the separation of a group of expenses into different

categories. A classification system is used to bring to management's attention certain costs that
are considered more crucial than others, or to engage in financial modeling. Here are several
types of cost classifications:

Fixed and variable costs

Expenses are separated into variable and fixed cost classifications, and then variable costs are
subtracted from revenues to arrive at a company's contribution margin. This information is used
for break-even analysis.

Departmental costs
Expenses are assigned to the departments responsible for them. This information is used on a
trend line to examine the ability of each department manager to control his or her assigned costs.

Distribution channel costs

Expenses are separated into each of the distribution channels used, such as retail, wholesale, and
Internet stores. The aggregate amount of each of these classifications is then subtracted from the
related channel revenues to determine channel profit.

Customer costs
Expenses are classified by individual customer, such as the costs of warranties, returns, and
customer service. This information is used to determine individual customer profitability.

Discretionary costs
Those expenses that can be temporarily reduced or eliminated are classified as discretionary. This
approach is used to reduce costs on a temporary basis, particularly when a business anticipates
having a brief decline in revenues.

The preceding examples of cost classifications should make it clear that costs can be
subdivide in many ways. Only a few of these classifications are provided for within the formal
accounting system (mostly to classify costs by department). Other types of classifications must
be performed manually, usually with electronic spreadsheet.
Lesson No: 2
Lesson Title: Financial Statement Analysis

Let’s Read
Note: This lesson is retrieved from Bragg, S. (2019, may 20). Financial Statement Analysis.
Retrieved from Accounting Tools:
https://www.accountingtools.com/articles/2017/5/14/financial-statement-analysis

Overview of Financial Statement Analysis

Financial statement analysis involves gaining an understanding of an organization's financial
situation by reviewing its financial reports. The results can be used to make investment and
lending decisions. This review involves identifying the following items for a company's financial
statements over a series of reporting periods:

Trends
Create trend lines for key items in the financial statements over multiple time periods, to see how
the company is performing. Typical trend lines are for revenue, the gross margin, net profits,
cash, accounts receivable, and debt.

Proportion analysis
An array of ratios is available for discerning the relationship between the size of various accounts
in the financial statements. For example, one can calculate a company's quick ratio to estimate its
ability to pay its immediate liabilities, or its debt-to-equity ratio to see if it has taken on too much
debt. These analyses are frequently between the revenues and expenses listed on the income
statement and the assets, liabilities, and equity accounts listed on the balance sheet.

Financial statement analysis is an exceptionally powerful tool for variety of users of

financial statements, each having different objectives in learning about the financial
circumstances of the entity.

Users of Financial Statement Analysis

There are a number of users of financial statement analysis. They are:

Creditors. Anyone who has lent funds to a company is interested in its ability to pay back the
debt, and so will focus on various cash flow measures.
Investors. Both current and prospective investors examine financial statements to learn about a
company's ability to continue issuing dividends, or to generate cash flow, or to continue growing
at its historical rate (depending upon their investment philosophies).
Management. The company controller prepares an ongoing analysis of the company's financial
results, particularly in relation to a number of operational metrics that are not seen by outside
entities (such as the cost per delivery, cost per distribution channel, profit by product, and so
forth).
Regulatory authorities. If a company is publicly held, its financial statements are examined by
the Securities and Exchange Commission (if the company files in the United States) to see if its
statements conform to the various accounting standards and the rules of the SEC.

Methods of Financial Statement Analysis

There are two key methods for analyzing financial statements. The first method is the use
of horizontal and vertical analysis. Horizontal analysis is the comparison of financial information
over a series of reporting periods, while vertical analysis is the proportional analysis of a
financial statement, where each line item on a financial statement is listed as a percentage of
another item. Typically, this means that every line item on an income statement is stated as a
percentage of gross sales, while every line item on a balance sheet is stated as a percentage of
total assets. Thus, horizontal analysis is the review of the results of multiple time periods, while
vertical analysis is the review of the proportion of accounts to each other within a single period.
The second method for analyzing financial statements is the use of many kinds of ratios.
Ratios are used to calculate the relative size of one number in relation to another. After a ratio is
calculated, you can then compare it to the same ratio calculated for a prior period, or that is based
on an industry average, to see if the company is performing in accordance with expectations. In a
typical financial statement analysis, most ratios will be within expectations, while a small
number will flag potential problems that will attract the attention of the reviewer. There are
several general categories of ratios, each designed to examine a different aspect of a company's
performance. The general groups of ratios are:

1. Liquidity ratios. This is the most fundamentally important set of ratios, because they measure
the ability of a company to remain in business.
Cash coverage ratio. Shows the amount of cash available to pay interest.
Current ratio. Measures the amount of liquidity available to pay for current liabilities.
Quick ratio. The same as the current ratio, but does not include inventory.
Liquidity index. Measures the amount of time required to convert assets into cash.

2. Activity ratios. These ratios are a strong indicator of the quality of management, since they
reveal how well management is utilizing company resources.
Accounts payable turnover ratio. Measures the speed with which a company pays its suppliers.
Accounts receivable turnover ratio. Measures a company's ability to collect accounts receivable.
Fixed asset turnover ratio. Measures a company's ability to generate sales from a certain
base of fixed assets.
Inventory turnover ratio. Measures the amount of inventory needed to support a given
level of sales.
Sales to working capital ratio. Shows the amount of working capital required to support
a given amount of sales.
Working capital turnover ratio. Measures a company's ability to generate sales from a
certain base of working capital.
3. Leverage ratios. These ratios reveal the extent to which a company is relying upon debt to
fund its operations, and its ability to pay back the debt.
Debt to equity ratio. Shows the extent to which management is willing to fund
operations with debt, rather than equity.
Debt service coverage ratio. Reveals the ability of a company to pay its debt
obligations.
Fixed charge coverage. Shows the ability of a company to pay for its fixed costs.

4. Profitability ratios. These ratios measure how well a company performs in generating a
profit.
Breakeven point. Reveals the sales level at which a company breaks even.
Contribution margin ratio. Shows the profits left after variable costs are subtracted
from sales.
Gross profit ratio. Shows revenues minus the cost of goods sold, as a proportion of
sales.
Margin of safety. Calculates the amount by which sales must drop before a company
reaches its break-even point.
Net profit ratio. Calculates the amount of profit after taxes and all expenses have been
deducted from net sales.
Return on equity. Shows company profit as a percentage of equity.
Return on net assets. Shows company profits as a percentage of fixed assets and
working capital.
Return on operating assets. Shows company profit as percentage of assets utilized.

Problems with Financial Statement Analysis

While financial statement analysis is an excellent tool, there are several issues to be
aware of that interfere with the interpretation of the analysis results. These issues are:
Comparability between periods. The company preparing the financial statements may
have changed the accounts in which it stores financial information, so that results may
differ from period to period. For example, an expense may appear in the cost of goods
sold in one period, and in administrative expenses in another period.
Comparability between companies. An analyst frequently compares the financial
ratios of different companies in order to see how they match up against each other.
However, each company may aggregate financial information differently, so that the
results of their ratios are not really comparable. This can lead an analyst to draw
incorrect conclusions about the results of a company in comparison to its competitors.
Operational information. Financial analysis only reviews a company's financial
information, not its operational information, so you cannot see a variety of key
indicators of future performance, such as the size of the order backlog, or changes in
warranty claims. Thus, financial analysis only presents part of the total picture.
Lesson No. 3
Lesson Title: Pricing Products and Services

Let’s Read

BREAK-EVEN ANALYSIS
Note: This part of the lesson is retrieved from Cain, S. L. (2020, December 11). Break-Even
Analysis. Retrieved from Investing Answers: https://investinganswers.com/dictionary/b/break-
even-analysis

What is Break-Even Analysis?

Break even analysis is a calculation of the quantity sold which generates enough revenues to
equal expenses. In securities trading, it is the point at which gains are equal to losses.
In other words, break-even analysis examines and calculates the margin of safety that’s based on
a company’s revenue – as well as related costs of running the organization.

What Is Break Even Analysis Used for?

A break-even analysis helps business owners determine when they'll begin to turn a profit, and
can help them price their products with that in mind. Usually, management looks at this metric to
help guide strategic decisions to grow or maintain the business.

Break-Even Analysis vs. Break-Even Point

Break-even analysis uses a calculation called the break-even point (BEP) which provides a
dynamic overview of the relationships among revenues, costs, and profits. More specifically, it
looks at a company’s fixed costs in relation to profits that are earned from each unit sold.
Break Even Analysis Varies Among Industries
Typical variable and fixed costs differ widely among industries. This is why comparison of
break-even points is generally most meaningful among companies within the same industry. The
definition of a "high" or "low" break-even point should be made within this context.
Break-even Analysis Formula
To calculate the number of units a business needs to sell in order to break even, the formula is as
follows:

PRICING STRATEGIES
Note: This part of the lesson is retrieved from Pricing Strategies. (2020, December 13).
Retrieved from The Economic Times: https://economictimes.indiatimes.com/definition/pricing-
strategies

Price is the value that is put to a product or service and is the result of a complex set of
calculations, research and understanding and risk-taking ability. A pricing takes into account
segments, ability to pay, market conditions, competitor actions, trade margins and input costs,
amongst others. It is targeted at the defined customers and against competitors.

There are several pricing strategies:

Premium pricing. High price is used as a defining criterion. Such pricing strategies work in
segments and industries where a strong competitive advantage exists for the company. Example:
Porsche in cars and Gillette in blades.
Penetration pricing: Price is set artificially low to gain market share quickly. This is done when a
new product is being launched. It is understood that prices will be raised once the promotion
period is over and market share objectives are achieved. Example: Mobile phone rates in India,
housing loans, etc.
Economy pricing: No-frills price. Margins are wafer thin; overheads like marketing and
advertising costs are very low. Targets the mass market and high market share. Example:
Friendly wash detergents; Nirma; local teas producers.
Skimming strategy: High price is charged for a product till such time as competitors allow after
which prices can be dropped. The idea is to recover maximum money before the product or
segment attracts more competitors who will lower profits for all concerned. Example: the earliest
prices for mobile phones, VCRs and other electronic items where a few rulers ruled attracted
lower cost Asian players.
These are the four basic strategies, variations of which are used in the industry
 UNIVERSITY OF ANTIQUE
COLLEGE OF BUSINESS AND ACCOUNTANCY
BACHELOR OF SCIENCE IN BUSINESS ADMINISTRATION
MAJOR IN MARKETING MANAGEMENT

NAME OF PRODUCT

NAME OF PROJECT MEMBERS

SUBMITTED TO:

DATE HERE
Table of Contents

Executive Summary

I. Introduction
A. Overview of product management
B. Importance of creating new products
C. Objectives of the project

II. Market Research and Analysis

A. Identify target market
B. Conduct market research and gather customer insights
C. Analyze competition and market trends

III. Ideation and Concept Development (Apply New Product Development Process)
A. Generate ideas for new products
B. Evaluate and prioritize ideas
C. Develop product concepts based on selected ideas
(Show Picture of Product and Discuss)

IV. Feasibility Assessment

A. Evaluate technical feasibility
B. Assess financial viability
C. Consider legal and regulatory requirements

V. Product Design and Development

A. Create product specifications
B. Develop prototypes and iterate based on feedback
C. Conduct usability testing and refine the product

VI. Marketing Strategy

A. Define target audience and positioning
B. Determine the following;
a. Pricing
b. Distribution
c. Promotional Strategies
d. Portfolio of the Product (Branding, Labelling and Packaging)
a. Color Scheme
b. Logo
c. Tag Line

VII. Launch and Post-Launch Activities

A. Develop a launch plan
VIII. Risk Management
A. Identify potential risks and challenges
B. Develop contingency plans
C. Monitor and mitigate risks throughout the product lifecycle

X. Conclusion
A. Summarize the product management process
B. Discuss the importance of continuous improvement
C. Reflect on lessons learned and future recommendations

Output for Mktg. 3/ Mktg. 7 - Product Management

Instructions:
1. Short Bond Paper
2. Font Style - Times New Roman
3. Font Size – 12
4. Yellow Soft Bound Cover
5. APA 7th Edition Format