Product Management

U N IT-IV

O bjectives
Understanding Concept of Product
How do we Classify Products
Understanding different levels of

product.
What are different product policies

Product Concepts:
What is Product?
Product is.
Anything that is offered to the market for
attention, acquisition, use or consumption
that satisfies a want or a need

 Good
Service
Anything that is offered to the market
for attention, acquisition, use or
consumption that satisfies a want or a
need

Ideas

And. Persons, Places, events

Properties, organization, information
and..even experiences
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Product Levels:
Core Benefit: that the customer is really buying
In a hotel, customer is buying rest and sleep

Basic Product through which the core benefit is delivered to the

consumer
A room, bed, bathroom, desk, closet

Expected Product :the set of attributes that the consumers

expect as obvious along with the product (otherwise

dissatisfaction)
Clean bed, pillow, fresh towel, soap, lamp, fan etc .

Augmented Product: attributes / features that exceed consumer

expectation which leads to happiness of the consumer

TV with cable, good interior design & dcor, good food etc.

Potential Product all possible augmentation and transformation

that the product may go through in future which leads to

customer delight
Bar inside the room, fruit bowl, computer facilities etc.
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 PRODUCTS CLASSIFICATION

Durability and
Tangibility
Products

Consumer goods
Classification

Industrial
Products

D urability and Tangibility:

Non Durable Goods: All FMCG

products
Durable Goods: Refregirators, TVS,

Computer, Clothing etc

Services: Salons, Banking, Insurance,

Education.
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Consum er goods Classifi

cation
Convenience Goods: Minimum effort like Soft

drinks, Shampoos, Soaps or cosmetics. This

includes Impulse goods and Emergency goods.
Shopping Goods: Consumer compares on bases
like sustainability, quality, price, and style. Eg:
Furniture, Electronic Appliances, used cars etc
Specialty goods: Special purchase effort
required, includes: Automobiles, Mens Suits..
Unsought goods: consumers are not aware or
does not think of buying such goods like.. Life
Insurance, Encyclopedias, reference books.
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Consum er Products

Convenience
Staples,
impulse,
emergency
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Consumer Products

Shopping
Homogenous
Heterogeneous

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Consum er Products

Specialty
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Consum er Products

Unsoug

ht
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Business Products

Installations
Accessory Equipment
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Business Products

Raw Materials
Component Parts

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Business Products

Process Materials
Supplies

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Business Products

Business Services
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Product Items, Lines, and Mixes

Product
Product Item
Item

AAspecific
specific version
version of
of aa product
product
that
can
be
designated
that can be designated as
as aa
distinct
distinct offering
offering among
among an
an organizations
organizations products.
products.

Product
Product Line
Line

AAgroup
group of
of closely-related
closely-related
product
product items.
items.

Product
Product Mix
Mix

All
All products
products that
that an
an
organization
organization sells.
sells.

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Product Mix
Width how many product lines a company has
Length how many products are there in a product line
Depth how many variants of each product exist within a
product line
Consistency how closely related the product lines are in
end use

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Gillettes Product Lines & Mix

Width of the product mix

Depth of the product lines

Blades and
Writing
razors
Toiletries instruments
Fusion 5 blade
Mach 3 Turbo
Mach 3
Series
Paper Mate
Sensor
Adorn
Flair
Trac II
Toni
S.T. Dupont
Swivel
Silkience
Double-Edge Soft and Dri
Lady Gillette Foamy
Super Speed Dry Look
Twin Injector Dry Idea
Techmatic
Brush Plus

Lighters

Cricket
S.T. Dupont
Atra

Right Guard

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Product Life Cycle and N ew

Product D evelopm ent

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Learning's:
What is Product Life cycle
What are the different stages in new

product development
Marketing Strategies in different
stages of PLC
Steps In New Product Development.

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W h y a p rod u ct life cycle?

A companys positioning and differentiation
strategy must change as the product, market,
and competitors change over the product life
cycle(PLC)
When we say that a product has a life cycle we
assert four things:
i. Products have a limited life.
ii. Products sales pass through distinct stages,
each posing different challenges,
opportunities and problems to the seller.
iii. Profits rise and fall at different stages of the
product life cycle.
iv. Products require different marketing,
financial, manufacturing, purchasing, and
human resource strategies in each life cycle

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P rod u ct Life C ycle

Product life cycle is the course
of a products sales and profits
over time.
Product life cycle(PLC) deals
with the life of a product in the
market with respect to business or
commercial costs and sales
measures.
The five stages of each product
lifecycle are product development,

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Product Life Cycle

Sales and
Profits

Sales

Profits

Product
Development

Introduction

Growth

Maturity

Time
Decline

Sales and Profits Over the Products

Lifetime

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In trod u ction S tag e of th e P LC

Summary of Characteristics, Objectives, &
Strategies
Sales
Low
Sales
Low
Costs
Costs

High
High cost
cost per
per customer
customer

Profits
Profits

Negative
Negative

Marketing
Marketing Objectives
Objectives

Create
Create product
product awareness
awareness and
and trial
trial

Product
Product

Offer
Offer aa basic
basic product
product

Price
Price

Use
Use cost-plus
cost-plus formula
formula

Distribution
Distribution

Build
Build selective
selective distribution
distribution

Promotion
Promotion

Heavy
Heavy to
to entice
entice product
product trial
trial
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G row th Stage of the P LC

Summary of Characteristics, Objectives, &
Strategies
Sales
Rapidly
Sales
Rapidly rising
rising
Costs
Costs

Average
Average cost
cost per
per customer
customer

Profits
Profits

Rising
Rising

Marketing
Marketing Objectives
Objectives

Maximize
Maximize market
market share
share

Product
Product

Offer
Offer extension,
extension, service,
service, warranty
warranty

Price
Price

Penetration
Penetration strategy
strategy

Distribution
Distribution

Build
Build intensive
intensive distribution
distribution

Promotion
Promotion

Reduce
Reduce to
to take
take advantage
advantage of
of demand
demand
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M aturity Stage of the P LC

Summary of Characteristics, Objectives, &
Strategies
Sales
Peak
Sales

Peak

Costs
Costs

Low
Low cost
cost per
per customer
customer

Profits
Profits
Marketing
Marketing Objectives
Objectives

High
High
Maximize
Maximize profits
profits while
while defending
defending market
market share
share

Product
Product

Diversify
Diversify brand
brand and
and models
models

Price
Price

Match
Match or
or best
best competitors
competitors

Distribution
Distribution

Build
Build more
more intensive
intensive distribution
distribution

Promotion
Promotion

Increase
Increase to
to encourage
encourage brand
brand switching
switching
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D ecline Stage of the P LC

Summary of Characteristics, Objectives, &
Strategies
Sales
Declining
Sales

Declining

Costs
Costs

Low
Low cost
cost per
per customer
customer

Profits
Profits

Declining
Declining

Marketing
Marketing Objectives
Objectives

Reduce
Reduce expenditures
expenditures and
and milk
milk the
the brand
brand

Product
Product

Phase
Phase out
out weak
weak items
items

Price
Price

Cut
Cut price
price

Distribution
Distribution

Selective:
Selective: phase
phase out
out unprofitable
unprofitable outlets
outlets

Promotion
Promotion

Reduce
Reduce to
to minimum
minimum level
level
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Three special categories of

P LC

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C ontinued
A Style is a basic and distinctive mode of
expression appearing in a field of human
endeavor. Styles appear in homes, clothing, art
etc.
A Fashion is a currently accepted or popular style
in a given field. Fashion pass through four
stages: Distinctiveness, emulation, mass fashion,
decline.
Fads are fashions that comes quickly into public
view , are adopted with great zeal, peak early,
and decline very fast.

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M arketing Strategy for

Introduction stage:
Inform Potential consumers.
Induce product trials.
Secure distribution in retail outlets
First or later

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M arketing strategies for

G row th stage
During the growth stage, the firm uses several
strategies to sustain rapid market growth.
Improves product quality and adds new features
and improved styling.
Adds new models and flanker products(i.e.,
products of different sizes, flavors, and so forth
that protect the main product).
It enters new market segments
It increases its distribution coverage and enters
new distribution channels.
It shifts from product- awareness advertising to
product- preference advertising.
It lowers price to attract the next layer of price
sensitive buyers.

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M arketing strategies for

M aturity stage

Three potentially useful ways to change

the course for a brand are market,
product, and marketing program
modification.
Market Modification
Sales volume = no. of brand users *
usage rate per user.
Expand the no. of brand users
Convert nonusers
Enter new market segments
Attract competitors customers

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Continued..
Increase the usage rate among users
Have consumers use the product on
more occasions.
Have consumers use more of the
product on each occasion
Have consumers use the product in new
ways.
Product modification
Trying to stimulate sales by
modifying the products characteristics
through
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Continued..
Quality improvement:
Aims at increasing the products functional
performance.
Eg: Aashirvaad, Annapoorna, Pillsbury,
Naturefresh
Feature improvement
Aims at adding new features, such as size,
weight, materials, additives, and accessories,
that expand the products performance,
versatility, safety, or convenience.
Style improvement
Aims at increasing the products esthetics appeal.
Eg; New car models, New Coke
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D ecline Stage
Increase investment
Resolve uncertainties - stable investment
Selective niches
Harvesting
Divesting
To establish a system for identifying weak

products.
Some firms abandon declining markets earlier
than others.

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N ew Product D evelopm ent

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 New Product Development (NPD); is The term used to

describe the complete process of bringing a new product or
service to market.
New product development refers to original products,
product improvements, product modifications, and new
brands developed from the firms own research and
development
Or
We can say that The process of designing and launching the
product into the market. Products that are either original,
improved modified or new brands by means of research and
development activities.
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N ew Product D evelopm ent

Process:

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N ew Product D evelopm ent

Strategy
New Product Development

Process:
Stage 1: Idea Generation
Internal idea sources:
R&D

External idea sources:

Customers, competitors, distributors,
suppliers
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N ew Product D evelopm ent

Strategy
New Product Development Process:
Stage 2: Idea Screening
Product development costs increase
substantially in later stages.
Ideas are evaluated against criteria;
most are eliminated.

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N ew Product D evelopm ent

Strategy
New Product Development Process:
Stage 3: Concept Development and

Testing
Product concepts provide detailed
versions of new product ideas.
Concept tests ask target consumers to
evaluate product concepts.

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N ew Product D evelopm ent

Strategy
New Product Development

Process:
Stage 4: Marketing Strategy

Development
Strategy statements describe:
The target market, product positioning, and
sales, share, and profit goals for the first few
years.
Product price, distribution, and marketing
budget for the first year.
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N ew Product D evelopm ent

Strategy
New Product Development Process:
Stage 5: Business Analysis
Sales, cost, and profit projections
Stage 6: Product Development
Prototype development and testing

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N ew Product D evelopm ent

Strategy
New Product Development Process:
Stage 7: Test Marketing
Standard test markets
Controlled test markets
Simulated test markets
Stage 8: Commercialization

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Several factors tend to hinder the new product

development : Social and government constraints.
Shortage of ideas in certain areas.
Fragmented market.
Cost of developments
Capital shortage.
Faster required development time.
Shorter product life cycle.
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 It is necessary for growth of enterprises.

It ensures the sales and profit maximization of the
firm.
All products decline with time (life cycle)
The market is dynamic.
Technical innovation is permanent etc.
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Thank You
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