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PRODUCT MANAGEMENT By Dr. G. Ramesh Ph.D. 16/1/2015 St Francis Institute of Management and Research, Borivali(W), Mumbai 1
St Francis Institute of Management and Research, Borivali(W), Mumbai
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PRODUCT MANAGEMENT
ByDr. G. Ramesh Ph.D.
16/1/2015
St Francis Institute of Management and Research, Borivali(W), Mumbai
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Two faces of product management
Voice ofThe Customer
Capabilities of the Company
InboundProduct Development
OutboundProduct Marketing
Convert the value propositioninto a market offering
Take the offering and the value message to market
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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
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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
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Product Management Function
A Product forms the most tangible expression of the offering of a business endeavour.
Planning the Product line &Product MixManagement of New ProductsProduct PositioningStrategic Product Management
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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 activities16/1/2015
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• 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.
• Establishing measurements and control review procedures.
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Product Management’s Role in Decision Making• Product• Packing• Pricing• Advertising • Media• Marketing Research• Promotions• Sales force
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Product Management Decisions
• Product Mix Decisions• Product Modification/Modernisation Decisions• Product line Pruning Decision• New Product/Diversification Decision• Branding and Packaging Decision
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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 company’s given product in the strategic product market area is determined using certain criteria to assign into categories.
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ILLUSTRATIONSales Industry Company1) Decline _______ _______2) Stable _______ _______3) Growth _______ _______ Market Share4) Marginal Market position________________5) Average Market position________________6) Leading Market position________________ Profitability7) Below Target_____________________________8) About Target_____________________________9) Above Target_____________________________
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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.
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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.
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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.
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Example – Auto Industry
• Sales of passenger vehicles in the domestic market increased by three per cent to 207,953 units from 201,896 units in May 2014.
• Maruti Suzuki’s sales rose 16.37 per cent to 90,560 units• Hyundai Motor increased 12.78 per cent to 36,205
units.• Tata Motors fell 29.54 per cent to 12,103 units• M&M decreased 21.36 per cent to 19,470 units.
Source : SIAM report and BS dated 16 Jul 2014
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Inferences• 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) Change the Product
(d) Discontinue the Product or the Product line.
(e) Introduce New Products into the line or add new product lines.
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A Model on Product Planning on a New Product Introduction • This model is based on rating the product on certain factors and sub factors.
• The Major factors in this model are
(a) Marketability(b) Durability(c) Productive ability(d) 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.
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Factor Rating of a Product X
Product Factor Factor Weight Assigned Factor value
Final Factor Evaluation
Marketability 0.4 71.4 28.6
Durability 0.3 68.6 20.6
Productive ability
0.1 91.6 9.2
Growth potential 0.2 69.2 13.8
Final Factor index number
1.0 72.2
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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
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An Illustration on one Factor w.r.t the Product X
Sub Factor
Sub Factor Weight
Very Good
EV(10)
Good EV(8) Av EV(6) Poor EV(4) Very Poor
EV(2) Total 9(Col2xcol8)
MA 1.0 0.1 1.0 0.2 1.6 0.5 3.0 0.2 0.8 - - 6.4 6.4
MB 1.0 0.1 1.0 0.2 1.6 0.4 2.4 0.2 0.8 0.1 0.2 6.0 6.0
MC 3.0 0.3 3.0 0.4 3.2 0.2 1.2 0.1 0.4 - - 7.5 23.4
MD 1.0 0.1 1.0 0.2 1.6 0.5 3.0 0.2 0.8 - - 6.4 6.4
ME 2.0 0.5 5.0 0.4 3.2 0.1 0.6 - - - - 8.8 17.6
MF 2.0 - - 0.2 1.6 0.5 3.0 0.3 1.2 - - 5.8 11.6
10.0 71.4
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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
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Varied Marketing Objectives at different stages of PLCSl.no Stages Intro Growth Maturity Decline
01 Marketing Objectives Inculcate Product Awareness
Maximize Market share
Maintain Market share, maximise profits
Reduce expenditure
02 Product Sales Low Rapidly Increasing Sales at Peak Declining
Costs High/customer Average customer Low/customer Low/customer
Profits negative rising high Declining
Customers innovators Early adopters Late adopters Laggards
Competition Nil or few Rising number Number stabilising them declining
Declining
03 Marketing Strategies Product Offer basic product
Offer product extensions
Diversify brands, models
Eliminate weak products
Price Cost plus pricing Penetration pricing Price to meet or beat competition
Reduce prices
Distribution Start withselective distribution
Build distribution Strengthen intensity of distribution
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.
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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.
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