Product Managemnt

8/8/2019 Product Managemnt

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11.1

Product Management



11.2

Product

• is a bundle of satisfaction that a customer buys

• almost always a combination of tangible and intangible

benefits



11.3



11.4

Core

Product

Attributes Styling

Colour

Brand

Name

PackagingQuality

InstructionsManual

After sales

services

Delivery

points &

systems

Installation

(for bulky

products)

C u s t o m e r

e d u c a t i o n

a n d T r a i n i n g

Customer

complaint

management

Payment

options

(for high

priced

prod-

cts)

Replacement

or

returns

policy

Guarantees &

warranties

Core Product

Formal

Product

Augmented

Product

Future ProductThe total product concept



11.5

Product Concepts

• What constitutes a Product?

• Core- Generic product for an airline is its aircraft.• Formal and Augmented Product – The additional features that s

firm adds up to its product along with the aesthetics that it

provides to give the product a distinctive appeal differentiates a

formal product from the core product.• The tangible component of the product along with the formal and

core components is called as augmented product.

• Potential Product – Everything that might be done to attract and

hold customers. These offerings differ from one market to another because of varying economic and competitive conditions.

• Thus product is the total concept that a customer buys



11.6

Classification of Product

1. Durability

• Non-durable-less mark up, high

advertising expenses, distribution channel

• Durable- High margin

• services



11.7

Buy less frequently> Gather product information> Fewer purchase locations> Compare for:

• Suitability & Quality• Price & Style

Special purchase efforts> Unique characteristics> Brand identification> Few purchase locations

New innovations> Products consumers don’t

want to think about.>Require much advertising & personal selling

Buy frequently & immediately> Low priced> Many purchase locations> Includes:

• Staple goods• Impulse goods• Emergency goods

2.Consumer-Goods Classification



11.8

Pdt Mix Items=12

No of Lines = 3

2b 2c 2d

3c3b

1d1c1b

3a

1a

2a2e

PL1

PL2

PL3

length

W

I

D

T

H



11.9

Multibrands –HLL Products

LUX

DOVELE SANCY

PEARS

REXONA

LEFEBUOY

HAMAM

BREEZE

JAI

MOTI

SURF

RIN

WHEEL

SUNLIGHT

ALA

501

BRUBROOKE BOND

RED LABEL

LIPTON GREEN LABEL

3 ROSES

TAAZA

DEEPAMTAJ MAHAL

SUPER Dust

Ruby dust

A1

Product

Line

Length

Product Line 1Bath Soaps

Product Line 2Fabric Wash

Product Line 3Beverages

Product Mix Width



11.10

• Breadth in product line refers to product linesmarketed by firm.

• Depth-the number of product items andvariations

• Consistency- the degree of similarity between product lines with respect to end use,

technology,production techniques &distribution channels.



11.11

Product Line

A product line refers to a group of products clubbed together byvirtue of satisfying a particular class of needs, being used together or distributed through the same channels or possessing common

physical or technical characteristics..



11.12

Factors contributing to product line decision:

1. Structural changes in the market-changing consumer lifestyles and demographics

2. Media development3. Intensity of inter-firm rivalry

4. Need to be present in all market segments

5. Marketing capabilities of the firm

6. Induce upselling7. Induce cross selling

8. Sales force and distributors pressure

.



11.13

Trading Up & Trading Down

ECONOMIC PRODUCTS

ADD PREMIUM PRODUCTS

PREMIUM PRODUCTS

ECONOMIC PRODUCTS



11.14

Line filling

Add more items within the present range• Satisfy dealers

• Utilise excess capacity

• Reaching incremental profits

• Fill in the holes

Disadvantage

Cannibalization and customer confusion( just-noticeable difference)

Line modernisation

Reformulation, redesign, changing unitsize, adding and removing features

Eg Pan Parag and microsoft

Line featuring- the idea is to attract consumers into the showrooms and thentry to get them exposed to other models.

Line Pruning-



11.15

BCG matrix

BOSTON CONSULTING GROUP (BCG)

MATRIX is developed by BRUCE

HENDERSON of the BOSTON CONSULTING

GROUP IN THE EARLY 1970’s.

According to this technique, businesses or products

are classified as low or high performers dependingupon their market growth rate and relative marketshare.



Relative Market Share and

Market Growth

To understand the Boston Matrix you

need to understand how market shareand market growth interrelate.



11.17

MARKET SHARE

• Market share is the percentage of the total market that is being serviced byyour company, measured either in revenue terms or unit volume terms.

• RELATIVE MARKET SHARE

• RMS = Business unit sales this year

Leading rival sales this year

• The higher your market share, the higher proportion of the market youcontrol.



11.18

MARKET GROWTH

RATE • Market growth is used as a measure of a market’s

attractiveness.

• MGR = Individual sales - individual salesthis year last year

Individual sales last year

• Markets experiencing high growth are ones where thetotal market share available is expanding, and there’s plenty of opportunity for everyone to make money.



11.19

THE BCG GROWTH-SHARE

MATRIX • It is a portfolio planning model which is based on

the observation that a company’s business units

can be classified in to four categories: Stars

Question marks

Cash cows Dogs

It is based on the combination of market growth and

market share relative to the next best competitor.



11.20

Assigning and Reaping Resource

20%-20%-

18%-18%-

16%-16%-

14%-14%-12%-12%-

10%-10%-

8%-8%-

6%-6%-4%-4%-

2%-2%-

00Marke

tG

row

th

Rate

3

?

Question marks

? ? ?

2

1

Cash cow

6

Dogs

8

710x 4x 2x 1.5x 1x10x 4x 2x 1.5x 1x

Relative Market Share.5x .4x .3x .2x .1x.5x .4x .3x .2x .1x

Stars

5

4

Negative cash Flow

Positive cash flow

Moderate cash flow



11.21

Star Revenue ++++

Expenses - - -

Net +

Problem ChildRevenue +

Expenses - - -

Net - -

Cash Cow

Revenue ++++++

Expenses - -

Net ++++

Dog

Revenue ++

Expenses - - - - -

Net - - -

Maintain Hold

Harvest

MarketGrowth Rate

High

Low

10 %

Build/

Withdraw

Kill/Divest

High Low1.0X

Relative Market Share

The BCG Model: cash position and strategy



11.22

BCG MATRIX

scorpio

Jeepbalero



11.23

Limitations of BCG Matrix• Predicting profitability from growth and

market share• Difficulty in dertermining market share

• Disregard for human aspect



11.24

Product Sales

Profits

Product

Development

Phase

New Product

Development

Cost

Sales and profit over a life cycle of a product

Profit

Break even

Point

Sales

Decline

Optimum Profit

Realization

Maturity

Growth

Introduction



11.25

Strategies in the Introduction

Stage

• Products are unfamiliar to consumers

• Market segments not well defined

• Product features not clearly specified

• Competition tends to be limited

• Sales volume increases slowlyStrategies

• Develop product and get users to try it

• Generate exposure so product becomes

“standard

Ski i d P i



11.26

Skimming and Penetration

Skimming-1. High price

2. Target customers least price sensitive

3. Distribution outlets should be limited to protect the high

prices

4. Effective when high entry barriers exists because it makes

the category very attractive to potential customers.

5. Eg consumer durables, industrial products



11.27

Penetration

1. Low price2. First movers advantage

3. Eg consumer packaged goods



11.28

Strategies in the Growth Stage

• Competitors increase

• Pressure on price

• Primary key to success is to build consumer preferences for specific brands

• Market segmentation begins the key issue• Characterized by strong increases in sales

Strategies

• Leader and followers strategy• Brand recognition

• Differentiated products

• Financial resources to support value-chain activities



11.29

Strategies in the Maturity Stage

• Aggregate industry demand slows

• Market becomes saturated, few new adopters

• Direct competition becomes predominant

• Marginal competitors begin to exit

Strategies

• Efficient manufacturing operations and process

engineering

• Low costs (customers become price sensitive)



11.30

Strategies in the Decline Stage

• Industry sales and profits begin to fall

• Strategic options become dependent on the actions of rivals

• Technological obsolesce, consumer behaviour

Strategies

• Maintaining

• Exiting the market



11.31

“Every morning in Africa, a gazelle wakes up It knows it must run faster than the fastest lion or it will be killed Every morning a lion wakes up.It knows it must outrun the slowest gazelle or it will starve to death It does not matter whether you are a lion or a gazelle.When the sun comes up, you better start running”.

Product Managemnt

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