product management process

8/2/2019 Product Management Process

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Dr. Prafulla Kumar Das


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Objectives

After learning this unit, the learner shall be able to:

Discuss the nature and scope of product

management Explain what it is meant by product portfolio

Explain the process of developing an optimumproduct-mix using product portfolio approach

Differentiate between types of productmanagement system

Develop a suitable product management system

for an organization


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Product forms the most tangible expression ofa business endeavor. Product also representsthe means through which the organizationseeks to satisfy consumer needs and generate

consumer satisfaction. Product policy and strategy-key determinant

for marketing strategy.

Product management decision- all decisions

incidental to creating, maintaining andpresenting the optimum bundle of needsatisfiers an organization is capable of offering.

We discuss here how PBM systems are

organized.


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The success of an organization- keeping winnersin the product range.

So planning the product mix is the basic function:

Introducing, continuing, and dropping a product. For better economic health-to promote products

with high ROI. Some low margin and no marginproducts for public interest, to promote high ROI

products. New products as per trend in customer patronage,

competition, and technological changes.

To eliminate absolutely unprofitable product


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Achieving desired product mix is not enough.Proper positioning, individuality different fromcompetition, uniqueness of benefits are important.

Consumer perceptions are studied to position theproduct as per the study.

Product management to be in the look out of newpastures including to an untried area for

diversification. Wide scope of product management is handled

looking to: size of the company, more people formore work, joint responsibility of the group being

headed by a senior.


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Management task Has soleresponsibility to seethecompleted

Plays amajor roleto see thetaskcompleted

Plays aminor roleto see thetaskcompletedEstablishing marketing objectives for theproduct

Planning marketing activities

Expense budget- totally and for each activity

Establishing measurement and controlreview procedure

Communicating plan to assureunderstanding of implementers

Monitoring progress as per the standard

Specifying corrective actions in case ofvarianceEnd of the year report to management

Postmortem plan revaluation for earningpurpose


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Marketing decisionareas SoledecisionmakerMajorparticipant Minorparticipant Opinionsometimesasked

Plays norole indecisionmakingProduct

Packaging

Pricing

Advertisingtheme/copy

Adverting media

Marketing research

Types or no. ofpromotionTiming of promo

Instruction to sales

forceInstruction to agents


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Product-mix decisions: Total product and agroup of products within the product mix toconsider: customer needs, market served,channel used, technology employed.

Decision about the width, length, depth, andconsistency of the product line.

Optimality of the product-mix ( profitability,

marketability, market share, long-termprospects). One important approach isportfolio approach.


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Product modification/ modernizationdecisions: Product line and length may beadequate but might not be relevant beingreflected by product returns.

- Whether to go product by product or to gofor complete overhaul but to study consumerand competitor reaction


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Product line pruning/elimination decision: Productsshould not be allowed to continue for executiveattachment for those consume resources (varyinginventory level, price reduction, expiry etc)

New product decision/ diversification decision:Most common product policy problem is additionof new product to the existing product line.

- Marketing needs, companys resources andcompetences, marketing, production and financial

considerations.- Innovation for competitive advantage, internal

development and acquisition are important sources


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Branding and packaging decision: Branding- one ofthe ways for distinctiveness, mind share, repeatpurchase, inculcating product image and helpsadoption.

- Whether to use manufacturer brand, family brand,

distinctive brand, distributor brands etc- Marketing and cost considerations dictate termsPackaging-designing and producing container or

wrapper. Can play major or minor role looking toproduct nature and market requirements. So, product

concept, design and package testing.Let us examine those one by one starting from Product

mix decisions.


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Each product is classified by rate of present or forecasted market growthand is a measure of market share dominance. When the share and growth ofeach product are jointly considered, the new basis for strategy evaluationemerges. For R&D market share growth strategies illustrate theimplications.Stars Problem child

High Cash generated ++Cash use..Net O2-

Cash generated +Cash use - ---------------------------Net - - -

Cash cows DogLow Cash generated + + +

Cash use -------------------------Net + +

Cash generated +Cash use --------------------------------Net 0

High 1.0x Low


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Low growth/ Dominant market share (Cashcows): Profitable- generate more cash thanrequired to maintain market share

- All strategies to maintain market dominanceincluding investment in technology leadership

- Pricing for cost leadership

- Excess cash support, research activities and

investment in growth areas


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High growth/Dominant market share(Stars): Market leaders with high growth.High cash generation as well as high

investment for fueling growth.- Strategy to protect market share andinvestment in ways for price reduction

- Product improvement and wider coverage- New users and new applications


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Low growth/subordinate share (Dogs): Notmarket leaders, minor market share, and inmatured market

- Few opportunities to grow at a reasonable

cost- All competitors fight for small market share- Strategy: Specialized segments to focus which

can be dominated

- Harvesting to keep the outgo to a minimumlevel to a foreseeable timeline.

- Abandoned deletion from the product-line.


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High growth/subordinate market share(Problem child): A combination of rapidgrowth and poor margin creates a demandfor cash.

Strategy: Either to invest heavily to get adisproportionate market share of new salesor to buy existing shares by acquiringcompetitors to move the product to starcategory

- Or to get out of business using aforesaidalternatives


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The long run health of the firm depends on havingsome products: a) those generate cash b) othersthose use up cash to generate growth

The overall strategy suggested by the matrix wouldbe:

- Aggressively support the newly introduced productto ensure dominance

- Continue present strategies for product B and C toensure maintenance of market share

- Gain market share for products by investing inacquisition- Narrow the range of models of product to focus on

one segment.- Divest products with low growth, low market share

products less than 1% market share


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There may be number of factors beyond market shareand market growth those have bearing on business:

- Contribution rate

- Barrier to entry

- Cyclicality of sale

- The rate of capacity utilization

- Sensitivity of sales to change price, promotion activities,service level etc

- Extent of captive business

- Nature of technology (maturity, volatility, complexity)- Availability of production and process opportunities

- Social, legal, governmental and union preserves andopportunities


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Product is central to survival but rapid fall in theproduct life cycle

Review product mix to find growth opportunitiesto meet objectives of the firm

Proliferation of brand as well as use of specialiststo manage those. So product managementsatisfies the diversified needs. The roles ofproduct manager are three:

- The little general manager or entrepreneur

- Coordinator of activities done by others- Assistant to the real product managers-Top

management


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Management task: described earlier in thetable

Marketing decision: Described in the secondtable

Budget and marketing plans:

- Has a definite say in the annual marketingbudget as responsible for day-to-dayimplementation


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Most applicable for a multi-product company Products to be neither insignificant nor very

big that could spell havoc to the company

Companies with one or two major productsfind product management very useful

Depends upon number of management levelsinvolved in decision making

Not useful when lengthy communicationchannels are involved.


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Changes in the number and types ofelements employed in the marketing mix

Changes in the number of product

managers employed within the sameorganizational unit

Changes in the resources or supportservices required for the marketingelements located internally and externally

If we consider those separately-


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With the change of marketing-mix elements,product managers job also changes. Preferenceof better margin or combination strategy toadvertising, the skill set would be different for

product managers. When the company expands, the people available

to handle those would be same. Productmanagers being less technically qualified shouldconcentrate on market research or strategicareas.


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Product managers role is also shaped by thesupport groups controlled by him. In case heuses internal resources, the influence of otherproduct managers would come to force as well.

Product managers job changes with the changein the stages of product lifecycle.

Very versatile and subject to changes with the

growth in size of the organization or changes inthe environment.


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Thank you

product management process

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