PRODUCT MANAGEMENT

SESSION-1

Product

Definition: Anything that can be offered to a market to satisfy a want or need. This Includes: Physical Goods, Services, Events, Experiences, etc.

Product Levels (Levitt)

Product Levels ex.

Potential product all possible Augmented product Fresh flowers Expected product Clean bed Basic product Hotel room Core benefit - Sleep

Product Classification Schemes

Durability Tangibility Use (Consumer/ Industrial)

Durability and Tangibility

Nondurable goods Services

Durable goods

Consumer Goods Classification

Convenience Specialty

Shopping Unsought

Industrial Goods Classification

Materials and Parts

Capital Items Supplies and Maintenance Services

Material and Parts: RAW MATERIALS RAW MATERIALS: FARM PRODUCTS,NATURAL PRODUCTS

Manufactured materials and Parts Component materials: usually fabricated further-iron into steel, yarn into cloth Component parts: they enter into finished product as it is-small motors into vacuum cleaners, Tires put into automobiles Capital items-Installations: factories,offices,heavy equipments EQUIPMENT: PERSONAL COMPUTERS,DESKS

Product Differentiation
Form (Bajaj Pulsar) Features (Television sets) Performance Quality (Hyundai) Conformance Quality (Cadburys) Durability (Duracell) Reliability (Sony) Repairability (HP) Style (Apple) DESIGN

SERVICE DIFFERENTIATION ORDERING EASE DELIVERY INSTALLATION CUSTOMER TRAINING CUSTOMER CONSULTING MAINTENANCE AND REPAIR RETURNS

Product Hierarchy
Need Family (Protection from elements) Product Family (Clothing) Product Class (Cotton Clothing) Product Line (Shirt) Product Type (Wrinkle free full sleeve) Item (Turtle Wrinkle Free)

Product Mix
Width -- number of Width number of different product different product lines lines Length -- total Length total number of items number of items within the lines within the lines Depth -- number of Depth number of versions of each versions of each product product Product Mix -Product Mix all the product all the product lines offered lines offered

Consistency

PRODUCT LINE ANALYSIS

SALES AND PROFITS

GROSS MARGINS SALES VOLUME PROMOTION

PRODUCT LINE ANALYSIS

Core products: Products which are highly promoted and has high sales volume but Low margins.ex:Biscuits Staples: Lower sales volume, but no promotions and hence better margins. High memory/faster CPUs Specialties: Items with lower sales volume but receive high promotion and generally bring in high margins.ex:Cars Convenience Items: Peripheral items that sell high volume but receive very little promotion. Eg.Printers,carry cases etc.These items carry higher margins. Consumers tend to buy these items from where they procured original equipment.

Product-Mix Width and Product-Line Length for Proctor& Gamble Products

PRODUCTLINE Detergents LENGTH Product-Mix Width Toothpaste Disposable Bar Soap Ivory (1879) Diapers Pampers (1961) Paper Tissue Charmin (1928) Puffs (1960) Banner (1982) Summit (1992)

Ivory Snow Gleem (1952) (1930) Crest (1955) Dreft (1933) Tide (1946) Cheer (1950)

Kirks (1885) Luvs (1976) Lava (1893) Camay (1926)

Line Stretching
Down-Market Stretch Down-Market Stretch

Up-Market Stretch Up-Market Stretch

Two-Way Stretch Two-Way Stretch

Two-Way Product-Line Stretch: Marriott Hotels

Economy High Above average Average
Fairfield Inn Low (Vacationers) Courtyard (Salespeople) Marriott (Middle managers)

Standard

Quality

Good

Superior
Marriott Marquis (Top executives)

Price

Line Stretching
Line filling Line modernization,featuring,and pruning UNILEVER announced PATH TO GROW program designed to get the most value from its portfolio by eliminating 1600 brands by 2003.

Line Stretching
Down-market stretch Mercedes c-class$30,000 Up-market stretch-Toyota's Lexus Two-way stretch-Texas calculators

Product-Mix Pricing
Product-line pricing-low,medium,high-shirts Optional-feature pricing-automobile Captive-product pricing-product require use of ancillary products razor-razor blades, Camera and film Two-part pricing-LOCAL STD CALLS,MOBILE CALLS-FIXED USAGE FEE+VARIABLE USAGE FEE By-product pricing-MAIN AND BY PRODUCTPETROLEUM Product-bundling pricing-pure-tour operators mixed bundle: seller offers goods individually and in bundle both- medial equipment and delivery

Co branding
Co branding Citibank with jet Airways Ingredient branding: Intel inside ADVANTAGES AND DISADVANTAGES OF CO-BRANDING

What is the Fifth P?

Packaging, sometimes called the 5th P, is all the activities of designing and producing the container for a product.

Packaging

All the activities of designing and producing the container for a product.

Factors Contributing to the Emphasis on Packaging Self-service Consumer affluence-pay more for convenience, appearance, prestige Company/brand image-recognition Innovation opportunity-large benefits to consumers and profits to producers

Packaging Objectives
Identify the brand Convey descriptive and persuasive information Facilitate product transportation and protection Assist at-home storage Aid product consumption

ITC KITCHEN OF INDIA

Followed retort pouches Sterilized packaging Heat resistant plastics

Types of Dairy Packaging

Pouch/Sachet: The pouch or sachets are formed from either a reeled or flat film. UV light may be used to sterilize the film. This type of dairy packaging is used to package butter, cheese, milk powder etc. Carton: It plays a very important role in the bulk packaging of milk. It is used for liquid, frozen and coagulated milk products. It is mainly available as preformed containers or as precut blanks or sheets ready to be formed into containers. Packet: Usually made of plastic, it is used to keep pasteurized liquid milk. Barrel: Barrels are usually made of wood and are coated with wax on the inside. They are used for bulk packaging of semi-solid buttermilk, sweetened condensed milk, etc. Cup: Cups are made up of paper with plastic or wax coating on inner surface. This type of dairy packaging is usually covered with a lid and used for frozen and coagulated products. Cans: This is popularly used for various types of solid, semi-solid and powdered products. Aluminum cans widely used. They are the most convenient for gas packing and suitable for dairy packaging. Bottles: Made of glass with aluminum closures, the bottles are suitable for storing milk shakes and liquid stuffs. Collapsible Tube: It is used for packaging semi-fluid products like sweetened condensed milk, processed cheese spread etc. It is usually made up of aluminum and lacquered on the inner side.

Attractive packaging

CARTON PACKAGING

Functions of Labels
Identifies-FROOTI,THUMPS UP Grades-QUALITY Describes-MRP Promotes- INFORMATION

Functions of Labels
Identifies Grades Describes Promotes

WARRANTIES AND GUARANTEES Warranties: formal statements of expected product performance by the manufacturer Guarantee:A formal promise or assurance (typically in writing) that certain conditions will be fulfilled, esp. that a product will be repaired or replaced if not of a specified quality and durability.

Domestic sales of small segment passenger cars(2010-11)

company Maruti Suzuki Hyundai Motor Tata motors ford GM Volkswagen Nissan motors Fiat India Skoda auto Honda Siel Cars Sales 835037 323538 168277 78116 72062 28904 12302 12102 11078 4862

The Product Life Cycle

the concept of the product life cycle applies to product categories, not to brands; it is related to the concept of diffusion of innovation different products will have differently-shaped life cycle curves; will diffuse at different rates a product is normally perceived to pass through four stages over its life cycle; introduction, growth, maturity, and decline each stage requires different marketing strategies

Product Life Cycle Stages

Introductionmost risky and Introduction expensive. Growthboth sales and profits rise, Growth often rapidly. Maturitysales increase at a Maturity decreasing rate and profits decline. Declinedemand drops, often because Decline of another product development.

Strategic Implications of the Stages

introductory stage: developing the market, creating
awareness, reaching the innovators

growth stage: competition begins, sales grow

quickly, profits peak, market penetration

maturity stage: competition is intense, sales slow

down, differentiated product offerings, customers are brand loyal, few new entrants

decline stage: customers move to other options,

competitors leave, profits are low, consider exit

Product Life Cycle Curve

INTRODUCTION GROWTH MATURITY DECLINE

Sales Volume Dollars

Profit 0 Loss

Time in years

Introduction Stage of the Introduction Stage of the PLC PLC

Sales Sales Costs Costs Profits Profits
Marketing Objectives Marketing Objectives

Low sales Low sales High cost per customer High cost per customer Negative Negative Create product awareness Create product awareness and trial and trial Offer a basic product Offer a basic product Use cost-plus Use cost-plus Build selective distribution Build selective distribution Build product awareness among Build product awareness among early adopters and dealers early adopters and dealers

Product Product Price Price Distribution Distribution Advertising Advertising

Growth Stage of the PLC Growth Stage of the PLC

Sales Sales Costs Costs Profits Profits

Marketing Objectives Marketing Objectives

Rapidly rising sales Rapidly rising sales Average cost per customer Average cost per customer Rising profits Rising profits Maximize market share Maximize market share Offer product extensions, service, Offer product extensions, service, warranty warranty Price to penetrate market Price to penetrate market Build intensive distribution Build intensive distribution Build awareness and interest in Build awareness and interest in the mass market the mass market

Product Product Price Price Distribution Distribution Advertising Advertising

Maturity Stage of the PLC Maturity Stage of the PLC

Sales Sales Costs Costs Profits Profits

Marketing Objectives Marketing Objectives

Peak sales Peak sales Low cost per customer Low cost per customer High profits High profits Maximize profit while defending Maximize profit while defending market share market share Diversify brand and models Diversify brand and models Price to match or best Price to match or best competitors competitors Build more intensive distribution Build more intensive distribution Stress brand differences and Stress brand differences and benefits benefits

Product Product Price Price Distribution Distribution Advertising Advertising

Decline Stage of the PLC Decline Stage of the PLC

Sales Sales Costs Costs Profits Profits

Marketing Objectives Marketing Objectives

Declining sales Declining sales Low cost per customer Low cost per customer Declining profits Declining profits Reduce expenditure and milk the Reduce expenditure and milk the brand brand Phase out weak items Phase out weak items Cut price Cut price Go selective: phase out Go selective: phase out unprofitable outlets unprofitable outlets Reduce to level needed to retain Reduce to level needed to retain hard-core loyal customers hard-core loyal customers

Product Product Price Price Distribution Distribution Advertising Advertising

Characteristics of Life Cycles

length of the life cycle will vary across markets; some are quite short and may be getting shorter some fads have very short life cycles, while other products stay at maturity for years in high-tech markets, life cycles are very short some products do not make it through all four stages; they may fail in introduction the life cycle must be considered in relation to a specific market; stage may vary across markets

Managing the Life Cycle

Successful life-cycle management requires predicting the shape of the curve and then successfully adapting strategies at each stage. when to consider entering the market how to manage to capitalize on growth it is possible to develop strategies that will extend the maturity stage; modify the product, devise new uses, or design new appeals greatest challenge comes at the decline stage which may result in product abandonment

Planned Obsolescence Fashion and Style

Style:

A distinctive manner of construction or presentation in any art, product or endeavour.

Fashion:

Any style that is accepted and purchased by successive groups of people over a long period of time.

a.Growth-slump-maturity pattern

b. Cycle-recycle pattern

c. Scalloped pattern

Time

Time

Time

Fashion-Adoption Process
Series of buying waves as a given style is popularly accepted by one group after another. Three theories of fashion adoption:

Trickle-downa given fashion flows Trickle-down down through several socioeconomic levels. Trickle-acrossthe fashion moves Trickle-across horizontally and simultaneously within several socioeconomic levels. Trickle-upa style first becomes popular Trickle-up at lower levels and then flows upward.

B. Style, fashion, & fad cycles

Style
S A L E S S A L E S

Fashion

Fad
S A L E S

Time

Time

Time

Fashion Adoption Theories in Product introduced at same time Product Action

offered first to upper socioeconomic group in all three types of stores:
TRICKLE-ACROSS
Exclusive high-priced specialty stores (boutiques)

TRICKLE-ACROSS

TRICKLEUP
Product adopted first by lower socioeconomic group

TRICKLEDOWN

Medium-priced department stores and specialty stores

TRICKLE-ACROSS
Discount stores

Extending the Product Life Cycle

Market Modification

1. Increase frequency of use by present customers 2. Add new users 3. Find new uses

Product Modification

4. Change product quality or packaging

Purpose: to sell more product and cover original investment

Extending the product Cycle to prevent the product going into decline you modify the market MARKET MODIFICATION you look for new consumers by changing the product so it has new users - and then new customers (Baking soda, Monaco,Milkmaid)
Examples from class

Extending the product Cycle MARKET MODIFICATION examples Windex glass cleaner(jnj) for cleaning jewelry Javex bleach for cloths to toilets Listerine

Extending the product Cycle to prevent the product going into decline you modify the product PRODUCT MODIFICATION adding new features, variations, model varieties will change the consumer reaction - create more demand therefore you attract more users
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Extending the product Cycle PRODUCT MODIFICATION Examples LAPTOPS - colors, features CD players-USB,DVD Chip flavors - many kinds-LAYS flavored tongue depressors couples seats at movie theatre
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Extending the product Cycle PRODUCT MODIFICATION examples continued digital sound at theatres

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Thank You, Class