Key Concepts Product Management

KEY CONCEPTS
OF PRODUCT
MANAGEMENT
CHAPTER 2
A. PRODUCT DIFFERENTIATION (PD)
 Is to distinguish a product from other
products, to make it more appealing to the
consumers whereas time to market is the
conception of a particular product until it is
available for sale.
 In Economics and Marketing, PD (or simply

differentiation) is the process of distinguishing
a product or service from others, to make it
more attractive to a particular target market.
This involves differentiating it from firm’s own
products as well as competitor’s products.
Marketing or Product Differentiation is the process
of describing the differences between products or
services , or the resulting list of differences. This is
done in order to demonstrate the unique aspects of a
firm’s product and create a sense of value.
The term unique selling proposition refers to

advertising to communicate a product’s
differentiation.
In Economics, successful product differentiation

leads to competitive advantage and is inconsistent
with the conditions for perfect the competition,
which include the requirement that the products of
competing firms should be perfect substitutes.
There are three types of product
differentiation:
1)Simple: based on a variety of characteristics

2)Horizontal: based on a single characteristic
but consumers are not clear on quality.
3)Vertical: based on a single characteristic
and consumers are clear on its quality.
The brand differences are usually minor;

they can be merely a difference in packaging or
an advertising theme.
The physical product need not change, but it may.
Differentiation is due to buyers perceiving a difference;
hence, it causes of differentiation may be functional
aspects of the product or service, how it is distributed
and marketed, or who buys it. The major sources of
product differentiation are as follows:
 Differences in quality which are usually accompanied

by differences in price.
 Differences in functional features or design.
 Ignorance of buyers regarding the essential
characteristics and qualities of goods they are
purchasing.
 Sales promotion activities of sellers and, in
particular, advertising
 Differences in availability (e.g. timing and location).
Firms have different resource endowments
that enable them to construct specific
competitive advantages over competitors.
Resource endowments allow firms to be
different which reduces competition and makes
it possible to reach new segments of the
market.
The objective of differentiation is to develop

a position that potential customers see as
unique. The term is used frequently when
dealing with freemium business models, in
which businesses market a free and paid
version of a given product.
Differentiation primarily affects performance
through reducing directness of competition: As
the product becomes more different,
categorization becomes difficult and hence
draws fewer comparisons with its competition.
A successful product differentiation strategy

will move your product from competing based
primarily on price to competing on non-price
factors (such as product characteristics,
distribution strategy, or promotional variables).
B. PRODUCT PLANNING
 Is the ongoing process of identifying and
articulating market requirements that
define a product’s feature set.
 Is the process of creating a product idea

and following through on it until the
product is introduced to the market.
 Product planning entails managing the
product throughout its life using various
marketing strategies, including product
extensions or improvements, increased
distribution, price changes and
promotion.
 Product planning also serves as the basis

for decisions about price, distribution
and promotion.
PHASES OF PRODUCT PLANNING
1) Developing the Product Concept
2) Studying the Market
Developing the Product Concept

 First phase of product planning is developing
the product concept.
 Marketing managers usually create ideas for
new products by identifying certain problems
that consumers face or various need. After the
product idea is conceived, managers will start
planning the dimensions and features of the
product.
Studying the Market
 Next step in the planning process is

studying the competition.
 Secondary research usually provides details
on key competitors and their market share,
which is the percent of the total sales that
they hold in the marketplace.
 Market research is a complex a task. It
must include an analysis of products that
are indirect competitors products
manufactured by the company observed.
MARKET RESEARCH
 A small company should consider doing both
qualitative and quantitative marketing
research for its new product.
 Market Research is the one stage of product
planning and it can be regarded as the way to
accomplish the activity though designing
questions, preparing the samples, collecting
data and analyzing etc.
 It also can be considered as a kind of the
communications between markets as
research is always question-answer form.
 Market research is applied to get market
information, market segmentation, market
trend and SWOT analysis such as consumer
perceptions, market structure, distribution,
past trends, strengths and weakness. The
process to get these information can be
divided into four parts which are
definition, collection, analysis, and
interpretation.
Qualitative Research
 A method of inquiry employed in many
different academic disciplines, traditionally in
the social sciences, but also in market
research and investigates the why and how of
decision making, not just what, where, when.
 Focus groups (allow companies to ask their consumers
about their likes and dislikes of a product in small
groups) are an example of qualitative infos.
 Always open-ended, more flexible, gives
consumer more creativity, pays more
attention to deeper understanding so that
they can get deeper data and richer ideas.
Quantitative Research
 It refers to the systematic empirical investigation
of social phenomena via statistical, mathematical
or numerical data or computational techniques.
 Is about understanding aspects of a market or what
kinds of customers making up the market and it
can be split into soft and hard parts. Soft parts
(phenomena like customer attitudes) and Hard
part (market size, brand shares and so on).
 It is based on the strict sampling methods so that
its data or results have levels of accuracy and
can be taken to represent and stand for the
population or to projecting.
C. SERVICE LIFE
 A product’s service life is its period of use in
service.
 It has been defined as a “product’s total life in
use from the point of sale to the point of
discard” and distinguished from replacement
life, “the period after which the initial
purchaser returns to the shop for a
replacement.”
 It represents a commitment made by the item’s
manufacturer and is usually specified as a
median.
 Shelf life – which deals storage time, or with
technical life, which is the maximum period
during which it can be physically function.
 Predicted life or MTTF/MTBF (Mean Time to

Failure/Mean Time Between Failures)/ MFOP
(maintenance-free operating period) – is useful
such that a manufacturer may estimate, by
hypothetical modeling and calculation, a
general rule for which it will honor warranty
claims, or planning for mission fulfillment.
Consumers will have different expectations

about service life and longevity based upon factors
such as use, cost, and quality.
BOL AND EOL
For certain products, such as those that cannot
be serviced during their operational life for
technical reasons, a manufacturer may calculate
a product’s expected performance at both the
beginning of operational life (BOL) and end of
operational life (EOL).
The performance of mission critical components

is therefore calculated for EOL, with the
components exceeding their specification at BOL.
-END OF DISCUSSION-


Key Concepts Product Management

Uploaded by

Copyright:

Available Formats

Key Concepts Product Management

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Key Concepts Product Management

Uploaded by

Copyright:

Available Formats

KEY CONCEPTS

 In Economics and Marketing, PD (or simply

The term unique selling proposition refers to

In Economics, successful product differentiation

1)Simple: based on a variety of characteristics

The brand differences are usually minor;

 Differences in quality which are usually accompanied

The objective of differentiation is to develop

A successful product differentiation strategy

 Is the process of creating a product idea

 Product planning also serves as the basis

Developing the Product Concept

 Next step in the planning process is

 Predicted life or MTTF/MTBF (Mean Time to

Consumers will have different expectations

The performance of mission critical components

You might also like