Introduction to Product Management

Classification of Consumer Products

1. Classified by how long they last
a. Durable
b. Semi-durable
c. Nondurable

2. Classified by how consumers buy them

a. Convenience: Staple, Impulse, Emergency
b. Shopping
c. Specialty
d. Unsought

3. Level of Involvement in purchase process

a. Low involvement
b. High Involvement

4. Type of Benefit
a. Functional
b. Emotional

5. Spectrum of Tangibility
a. Tangible = Good
b. Intangible = Services

Levels of Product
1. Core Benefit = Core Concept
- It is answer to what the customer is really buying? And the answer is need.
2. Basic Product = Generic Product
- Turning the core benefit in an offer which consumer can buy or use
3. Expected Product
- A set of attributes consumers expect when they purchase a product.
4. Augmented Product
- A set of attributes that exceeds customer expectations
- Helps to differentiate the offer from competitors
5. Potential Product
- Possible augmentations or transformations the product might undergo in future

Features / Elements of Product

1. Extrinsic Elements: Packaging, After Sales Service, Warranty/Guarantee, Brand Name
2. Intrinsic Elements: Ingredients, Design, Size, Shape, Weight, Colour, Variety

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The value of a product is a mix between
1. Value of features/ attributes (represents all attributes like packaging, design,)
2. Value of its image (represented by brand)

The more the value of attributes will increase, the more will be the image and the more a
consumer will be ready to spend money.

Functions of Product Manager

Product managers have these tasks:
Develop a long-range and competitive strategy for the product
Preparing an annual marketing plan and sales forecast
Working with advertising and merchandising agencies to develop copy, programs, and
campaigns
Stimulating support of the product among the sales force and distributors
Gathering continuous intelligence on the products performance, customer and dealer
attitudes, and new problems and opportunities
Initiating product improvements to meet changing market needs

Product Life Cycle

There are three levels of PLC.
At the highest level of aggregation is the product class, category or industry
Second is the combined life cycle for number of closely competing brands = Product
form PLC
At the third level, it is brand or model life cycle

Packaging Decisions
Packaging Meaning
Packaging consists of all the activities of designing and producing the container or
wrapper for a product.
It is the enclosing of a physical product that requires protection from tampering.
Package is a covering or container for a product that provides product protection,
facilitates product use and storage, and supplies important marketing communication.

Classification- By way of Packaging

- Vacuum Packaging: Air is removed from the package before sealing.
- Aseptic Packaging: Package is sterilized primarily to contain the eatables.
- Retort Packaging: Through aseptic processing primarily for ready-to-eat foods.
- Shrink Packaging: Plastic film is placed tight on container through heating process.
- Strip Packaging: like medicines.
- Gas Flush Packaging: Air in package is replaced by gases like nitrogen.
- Moisture-proof Packaging
- Blister Packaging: Like in toothbrushes.

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 - Skin Packaging: A thick plastic sheet is drawn over product placed normally on hard
card board kind of base. Product become immobilized and cant shift from its place
within package.
- Tamper-evidence Packaging

Levels of Packaging
Primary Package next to product
Secondary Package
Tertiary Package

Features of Packaging
Material used
Glass, metal cans/foil, plastic films, paperboard boxes, jute, cloth, paper, ..
Transparent / Opaque
Expensive / cost effective
Environment friendly
Shape
Size
Colour
Graphics
Information / Communication
Primarily label
Many a times non-separable

Types of Packaging
Unit package: Consumer size. It can be
1. Multipack = Several small items/units are offered in one pack
2. Bundled package (usually for gifts)
Shipping package for transporting unit packages

Purposes of Packaging
Protect the product on its way to the customer
From dust and dirt, heat, rain, and others
During shipment/transportation
Prevent tampering
Deter shoplifting
Maintains quality
Protect the product after it is purchased
From evaporation, spilling, and spoilage
Child-proof
Identifying the brand/companys product = recognition
Help gain acceptance from the middleman
Must be suitable for stacking and displaying
Information tool

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 Help persuade consumers to buy the product = attraction
Silent sales-person
Takes care of self-service part
Positioning
Differentiation

Design Effective Package

Can be a products differential advantage
Zip-lock
Compact (easy storage)
Aesthetic appeal
Reusable jars
Self-contained applicator
Re-fills
Results in
Ease of use
Safety
Long time usage possibility
Thus increases utility of the package through innovation and gives competitive advantage

Labeling
A label is a part of a product that carries information about the product and the seller.
Labeling refers to any written or graphic communications on the packaging or on a
separate but associated label

Types of Label
Brand label
Descriptive label
Grade label

Information / Communication Elements

For Consumers
Product facts
Ingredients, Flavours, Directions for use, Suggestions for alternative uses,
Directions for storage, Safety warnings, Nutritional Info, MRP
Manufacturing date, Expiry date
Product benefits
Warranty information, Toll-free number /contact address, customer service info

For Distribution
Universal Product Code (UPC)
The set of black bars or lines, readable by scanners, creates a national system of
product identification (bar code)
Batch Number
Handling/Storage info

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 Product-Mix Strategies

About Product-Mix
Product mix (Product assortment)
It is the total group of products that an organization makes available to customers

Product mix has a certain:

Width
Length
Depth
Consistency
Width of product mix is the number of product lines a company offers.
Product Line is a firms total product offering designed to satisfy a need or desire of
target customers.
Length of product line refers to total number of types in the product line.
Depth of product mix is the number of versions offered of each product in the line
Consistency of product mix refers to how closely related the various products lines are in
end use, production requirements, distribution channels or some other way.

Product-mix Strategy
Adding a new product line
Removing an existing product line

Product Line strategy

1. STRETCHING (Adding new products to line) [Adding to length]
Downward line stretch - augments a line by adding offers at the lower end
Upward line stretch adds higher priced and claiming more quality offers
Two way stretch adds products at both upper and lower ends
Neutral Stretch adds products at existing price and quality parameters
2. FILLING (Adding to the Depth)
3. CONTRACTING (Dropping products Reducing Length and/or Depth)

Risk for extending mix

CANNIBALIZATION
This indicates the loss of sales of an existing brand when a new item in a product line or a
new product line is introduced. In other words, when a new item eats up sales on an
existing brand as the firms current customers simply switch to the new product

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 Flat Panel Display Product Clas s

Width=2 LCD TV P Lines Plasma TV

Items
Types 42 LG 80 FR 50 PG 61 UR
Jazz (LG-80) 32 LG 80 FR PG 61
32 LG 80 UR 42 PG 61 UR

52 LG 70 YR 50 PG 12 UR
LG 70 47 LG 70 YR PG 21
42 LG 70 YR 42 PG 21 UR

47 LG 60 FR PC 5 32 PC 5 RA
SCARLET LG 60 42 LG 60 FR
32 LG 60 UR
PG 70 60 PG 70 FR
47 LG 53 FR
42 LG 53 FR Le ngth-4 Depth-6
LG 53
37 LG 53 FR
32 LG 53 FR

47 LG 30 FR Total Le ngth-9
42 LG 30 FR Total De pth-25
37 LG 30 FR
LG 30
32 LG 30 FR
26 LG 30 FR
Le ngth=5 22 LG 30 FR
De pth=19
SKUs

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 Product Innovations

Types of Innovation
Continuous innovation
A modification of an existing product that sets one brand apart from its
competitors
Gives users the added benefits
Consumer doesnt have to learn anything new (or a little) to use a continuous
innovation
= An incremental innovation
Knockoff
A new product that copies, with slight modification, the design of an
original product
The knockoff is not an exact copy
Ex: clothing, jewelry

Dynamically continuous innovation

A pronounced modification to an existing product that requires a modest amount
of learning or change in behaviour to use it
Convergence
Ex: Communication technologies

Discontinuous innovation
A totally new product that creates major change in the way we live
When a product is there for the first time; the first car, the personal computer,
smart phone
It is actually like an invention.
Kind of breakthrough
= A disruptive innovation

Kinds of New Products

From the producers perspective
New to the world
New product lines
Additions to the existing product lines
Improvements and revisions in the existing products
Re-positionings
Cost reductions (due to process innovations)

Reasons of Failure of Products

1. Marketing and Selling
a. Poor prediction of Competitors reactions
b. Overestimation of market size
c. Ineffective promotion
d. Lack of distribution coverage

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 e. Expensive product
f. Inconsistent positioning
2. Technology and Process
a. Me-too product
b. Technical or design problem
c. Poor timing of launch
3. Customer Values
a. Unable to match product offerings to customer needs
b. Unable to track changes in consumer tastes
4. Organization and People
a. Lack of senior management support
b. No sustainable commitment and resources
c. Lack of organizational teamwork
d. Lack leadership
e. Lack long term vision
f. Obsession with current products

Stage-Gate Process by Robert Cooper

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New Product Development Process
Idea Generation
Idea Screening
Product concept development, screening and testing
Marketing strategy development
Business analysis
Technical / Product development
Test marketing
Commercialization

A cross functional team works on a new product project:

A Strategy expert
A Technical expert
An Engineer
A Designer
A Manufacturing expert
A Financial expert
A Supply-chain specialist
A Marketing-Sales expert

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