Dr.

Prafulla Kumar Das

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 optimum product-mix using product portfolio approach Differentiate between types of product management system Develop a suitable product management system for an organization

Product forms the most tangible expression of a business endeavor. Product also represents the means through which the organization seeks 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 and presenting the optimum bundle of need satisfiers an organization is capable of offering. We discuss here how PBM systems are organized.

The success of an organization- keeping winners in 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 margin products 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

Achieving desired product mix is not enough. Proper positioning, individuality different from competition, uniqueness of benefits are important. Consumer perceptions are studied to position the product as per the study. Product management to be in the look out of new pastures including to an untried area for diversification. Wide scope of product management is handled looking to: size of the company, more people for more work, joint responsibility of the group being headed by a senior.

Management task

Has sole responsibili ty to see the completed

Plays a major role to see the task completed

Plays a minor role to see the task completed

Establishing marketing objectives for the product

Marketing decision areas

Sole decision maker

Major participant

Minor participant

Opinion sometimes asked

Plays no role in decision making

Product Packaging Pricing Advertising theme/copy Adverting media

Marketing research Types or no. of promotion

Product-mix decisions: Total product and a group of products within the product mix to consider: customer needs, market served, channel used, technology employed. Decision about the width, length, depth, and consistency of the product line. Optimality of the product-mix ( profitability, marketability, market share, long-term prospects). One important approach is portfolio approach.

Product modification/ modernization decisions: Product line and length may be adequate but might not be relevant being reflected by product returns. Whether to go product by product or to go for complete overhaul but to study consumer and competitor reaction

Product line pruning/elimination decision: Products should not be allowed to continue for executive attachment for those consume resources (varying inventory level, price reduction, expiry etc) New product decision/ diversification decision: Most common product policy problem is addition of new product to the existing product line. - Marketing needs, companys resources and competences, marketing, production and financial considerations. - Innovation for competitive advantage, internal development and acquisition are important sources

Branding and packaging decision: Branding- one of the ways for distinctiveness, mind share, repeat purchase, inculcating product image and helps adoption. - Whether to use manufacturer brand, family brand, distinctive brand, distributor brands etc - Marketing and cost considerations dictate terms Packaging-designing and producing container or wrapper. Can play major or minor role looking to product nature and market requirements. So, product concept, design and package testing. Let us examine those one by one starting from Product mix decisions.

Each product is classified by rate of present or forecasted market growth and is a measure of market share dominance. When the share and growth of each product are jointly considered, the new basis for strategy evaluation emerges. For R&D market share growth strategies illustrate the implications. Stars High Cash generated ++ Cash use .. Net O2Problem child Cash generated + Cash use --------------------------Net - - -

Cash cows
Low Cash generated + + + Cash use -----------------------Net ++ High 1.0x

Dog
Cash generated + Cash use ------------------------------Net 0 Low

Low growth/ Dominant market share (Cash cows): Profitable- generate more cash than required to maintain market share All strategies to maintain market dominance including investment in technology leadership Pricing for cost leadership Excess cash support, research activities and investment in growth areas

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 and investment in ways for price reduction - Product improvement and wider coverage - New users and new applications

Low growth/subordinate share (Dogs): Not market leaders, minor market share, and in matured 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 minimum level to a foreseeable timeline. Abandoned deletion from the product-line.

High growth/subordinate market share (Problem child): A combination of rapid growth and poor margin creates a demand for cash. Strategy: Either to invest heavily to get a disproportionate market share of new sales or to buy existing shares by acquiring competitors to move the product to star category - Or to get out of business using aforesaid alternatives

The long run health of the firm depends on having some products: a) those generate cash b) others those use up cash to generate growth The overall strategy suggested by the matrix would be: - Aggressively support the newly introduced product to ensure dominance - Continue present strategies for product B and C to ensure maintenance of market share - Gain market share for products by investing in acquisition - 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

There may be number of factors beyond market share and 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 and opportunities

Product is central to survival but rapid fall in the product life cycle Review product mix to find growth opportunities to meet objectives of the firm Proliferation of brand as well as use of specialists to manage those. So product management satisfies the diversified needs. The roles of product manager are three: The little general manager or entrepreneur Coordinator of activities done by others Assistant to the real product managers-Top management

Management task: described earlier in the table Marketing decision: Described in the second table Budget and marketing plans: Has a definite say in the annual marketing budget as responsible for day-to-day implementation

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 products find product management very useful Depends upon number of management levels involved in decision making Not useful when lengthy communication channels are involved.

Changes in the number and types of elements employed in the marketing mix Changes in the number of product managers employed within the same organizational unit Changes in the resources or support services required for the marketing elements located internally and externally If we consider those separately

With the change of marketing-mix elements, product managers job also changes. Preference of better margin or combination strategy to advertising, the skill set would be different for product managers. When the company expands, the people available to handle those would be same. Product managers being less technically qualified should concentrate on market research or strategic areas.

Product managers role is also shaped by the support groups controlled by him. In case he uses internal resources, the influence of other product managers would come to force as well. Product managers job changes with the change in the stages of product lifecycle. Very versatile and subject to changes with the growth in size of the organization or changes in the environment.

Thank you