PRODUCT MANAGEMENT

Two faces of product management

Convert the value proposition into a market offering Inbound Product Development

Capabilities of the Company

Outbound Product Marketing

Voice of The Customer

Take the offering and the value message to market

Inbound Responsibilities
Understanding customer needs and Understanding the market and competition for the product Researching feature enhancements and upgrades for future releases Creating Marketing Requirements Document (MRD) and product release plan Helping to develop product roadmap and competitive positioning Working with development, testing, and QA to ensure that product meets requirements and stays within schedule

Outbound Responsibilities
Managing product launch
Supporting marketing with outbound marketing communication and PR Supporting sales with product training, demos, customer presentations, data sheets, competitive positioning Supporting sales on key customer deals and accompany sales personnel on key customer visits Monitoring and improving customer satisfaction

Product Management Function

A Product forms the most tangible expression of the offering of a business endeavour. Planning the Product line &Product Mix Management of New Products Product Positioning Strategic Product Management

Product Management Task

Establishing Marketing Objectives for the product Spotting marketing opportunities and check are they exploitable.

Planning the Marketing Activities to achieve Product objectives Determine expense budget, totally and for each marketing activity
Scheduling the Marketing activities

 Communicating plan to assure understanding by those who will implement

Monitoring progress & effectiveness of performance according to standards Specifying corrective action when plan & performance are at variance.
Post Mortem plan revaluation for earning purposes. Establishing measurements and control review procedures

Product Managements Role in Decision Making

Product Packing Pricing Advertising Media Marketing Research Promotions Sales force Agents

Product Management Decisions

Product Mix Decisions Product Modification/Modernisation Decisions Product line Pruning Decision New Product/Diversification Decision Branding and Packaging Decision

An Integrated Approach(Matrix Approach) to Product Planning

Phase A : This requires definition of the relevant universe in terms of the relevant strategic product/Market area. Phase B : This entails examination of the sales position for the given product in the strategic market area. Phase C : The market share of the companys given product in the strategic product market area is determined using certain criteria to assign into categories.

ILLUSTRATION
Sales Industry Company 1) Decline _______ _______ 2) Stable _______ _______ 3) Growth _______ _______ Market Share 1) Marginal Market position________________ 2) Average Market position________________ 3) Leading Market position________________ Profitability 1) Below Target_____________________________ 2) About Target_____________________________ 3) Above Target_____________________________

Interpretation
Product A showed a marginal market share in a growth industry had stable but below target profitability in the first year. This improved to growing profits and average market share in the next year to achieve targets. This was followed by an above target profits coupled with an average market share in a growing industry. Product A has increased steadily.

Product B on the other hand is in a declining industry with an average market share and stable profits on target in the first year but in the next year a decline in profitability is seen . In the third year the decline in profits continues with a drop in the market share as well.

Suggested Marketing Strategy

For Product A : To move from Av Market share to the Dominant position maintaining above Target profits. For Product B : To Improve market share position from Marginal to Av and also achieve stability in sales although the profit may be below target.

 A Firms major strategic product/market decision alternatives for its existing product line and the component products of that time in a given strategic product market area are (a) Not to change the product and its marketing strategies
(b) Not to change the product but the marketing strategies which may involve a change in the advt, distribution and pricing strategies associated with a given positioning and given product attributes. (c) (d) (e) Change the Product Discontinue the Product or the Product line. Introduce New Products into the line or add new product lines.

Inferences

 This model is based on rating the product on certain factors and sub factors.

A Model on Product Planning on a New Product Introduction

The Major factors in this model are

(a) (b) (c) (d) Marketability Durability Productive ability Growth potential

These factors are assigned weights in accordance with their relative importance. Each Factor has further Sub factors which are also weighted. In Evaluating the sub factors of the factor Marketability, each of the factor ratings are assigned an estimated probability which essentially evaluates the chances of whether a factor will achieve the rating awarded to it.

Factor Rating of a Product X

Product Factor Marketability Durability Productive ability Factor Weight 0.4 0.3 0.1 Assigned Factor Final Factor value Evaluation 71.4 68.6 91.6 69.2 28.6 20.6 9.2 13.8 72.2

Growth potential 0.2 Final Factor index number 1.0

Legend
Columns 1-Sub factor 2-Sub factor weight 3-Very Good 4- Good 5- Average 6- Poor 7- Very Poor 8- Total 9- Sub factor Evaluation Rows MA-Relative to present distribution channels MB- Relative to present product lines MC- Quality/Price relationship MD- Number of sales and grades ME- Merchandisability MF- Parts on sale of present products

An Illustration on one Factor w.r.t the Product X

Sub Fact or Sub Fact or Wei ght Ver y Go od EV(10 ) Good EV(8) Av EV(6) Poor EV(4) Very Poor EV(2) Total 9(Col 2xcol 8)

MA MB MC MD ME

1.0 1.0 3.0 1.0 2.0 2.0 10.0

0.1 0.1 0.3 0.1 0.5 -

1.0 1.0 3.0 1.0 5.0 -

0.2 0.2 0.4 0.2 0.4 0.2

1.6 1.6 3.2 1.6 3.2 1.6

0.5 0.4 0.2 0.5 0.1 0.5

3.0 2.4 1.2 3.0 0.6 3.0

0.2 0.2 0.1 0.2 0.3

0.8 0.8 0.4 0.8 1.2

0.1 -

0.2 -

6.4 6.0 7.5 6.4 8.8 5.8

6.4 6.0 23.4 6.4 17.6 11.6 71.4

MF

Product Life Cycle An Aid to Product Planning

The PLC curve passes through Four discernible stages.
Log Phase (Introduction) Exponential Phase (Growth) Stationary Phase (Maturity & saturation) Decline Phase

Varied Marketing Objectives at different stages of PLC

Sl.no
01

Stages
Marketing Objectives

Intro
Inculcate Product Awareness Sales Costs Profits Customers Competition Low High/customer negative innovatiors Nil or few

Growth
Maximize Market share Rapidly Increasing Average customer rising Early adopters Rising number

Maturity
Maintain Market share, maximise profits Sales at Peak Low/customer high Late adopters Number stabilising them declining Diversify brands, models Price to meet or beat competition Strengthen intensity of distribution

Decline
Reduce expenditure

02

Product

Declining Low/customer Declining Laggards Declining

03

Marketing Strategies

Product Price Distribution

Offer basic product Cost plus pricing Start withselective distribution

Offer product extensions Penetration pricing Build distribution

Eliminate weak products Reduce prices Eliminate unprofitable outlets, become more selective than growth phase

Promotion

Advertise to build awareness among early adopters and use heavy sales promotion to promote trial

Advertise to sustain awareness and interest in the mass market and go easy on sales promotion to exploit heavy consumers demand

Build selective demand by highlighting differentiation .step up sales promotion to promote from competitors

Reduce advertising to the level needed to maintain loyal buyers reduce sales promotion to minimal level.

PLC as Planning, Control & Forecast Tool

Planning
Products do not follow a Natural and inevitable cycle of birth, growth and death as organisms do. Also as the Life Cycle stages do not have predictable duration and inevitable sequence, the PLC concept can be used as a general guideline for planning future action. As a Planning tool, it emphasizes the type of main Marketing challenges a product is likely to face in different phases, and suggests major alternative strategies that may be followed at each stage

Control
As a Control tool, it enables comparison of product performance against similar products in the past.

Forecast
As a Forecast tool, it has limited utility as sales histories of products differ widely and the life cycle stages exhibit varying duration.

Operationalising the PLC

Deciding upon the unit of analysis. Definition of relevant market
Type of Market Distribution pattern Market segment

Identification of the products stage in the PLC Defining the unit of measurement Determining the time unit.

Identification of the products stage in the PLC as suggested by Polly and Cook (HBS)

PLC as a Tool to Plan Market Share Strategies

Suggested Framework developed by Bernard Catry & Michel Chevalier Criteria 1 Criteria 2 : : The stage in PLC the Product is in. Placing the firm into categories on the basis of its market share as (i) Small (ii) Average (iii) Dominant

On the basis of these two criteria, the firm can choose whether to (i) to increase its position (ii) to maintain its position at the same level (iii) to reduce its market share

Market share Diagnosis

Strategic Alternatives Introducti on Maturity Decline Marginal Average Dominant Marginal Average Dominant Marginal Average Dominant

Increased Investment

I++ E+++

I++ E++

I+++ E++()

I++ E+()

I+++ E +()

I + +++ E+()

I+ E - -()

I+ + E---

I++ E- - - -

Maintaining Position

I E

I+ E+

I++ E++

I E

I E+++

I E++++

I+ E_

I E+

I_ E++

Disinvestment

I E

I_ E

I_ E

I_ E+

I___ E+++

I____ E+ + + +

I_ E

I__ E++

I___ E++

Action Implication
In the Introduction stage of the Product Life Cycle, the best short term strategy for a weak brand is to invest in Market share. On the other hand, for the dominant firm the best strategy would be to harvest. Firms with a marginal market position are advised not to invest for more market share at a very late phase of development of market.

Assignment
Pick up one product of Consumer Good and Consumer Durable of your choice. Construct the PLC and Identify the stage of PLC that they are in and suggest implication of product planning using PLC.