4th unit - MARKETING MANAGEMENT Managing Product As per VTU syllabus

1. MANAGING THE
PRODUCT

2. 4TH UNIT SYLLABUS
 Managing the Product: Concept, product
hierarchy, product line, product mix, product
mix strategies, Product life cycle and its
strategies, New Product Development,
packing as a marketing tool, Role of labeling
in packing.

3. WHAT IS PRODUCT
 A product is anything that can be offered to a
market for attention, acquisition, use or
consumption that might satisfy a want or need
 A product is a bundle of utilities consisting of
various features and accompanying services

4. CLASSIFICATION OF PRODUCTS

5. PRODUCT HIERARCHY
 Need family - core need or existence of product such as security with insurance industry
 Product family - all the product classes that satisfy core needs such as savings & income
 Product class - a group of products within product family such as ULIPs
 Product line - a group of products within a product class that are closely related eg term insurance
 Product type – a group of items with in a product line
 Item – stock keeping unit or product variant
(Note :- Example taken from insurance industry to explain)

6. PRODUCT LEVELS
 Core product - What the buyer is really buying such as “rest & sleep” with hotel
industry
 Basic product – basic expectation from the customer such as bed, bathroom,
towels ….
 Expected product – a set of attributes and conditions buyers normally expects
such as clean bed, fresh towels, working lamps,…
 Augmented product – products that exceeds customer expectations such
as paintings, refrigerators , high end televisions …
 Potential product- product and services such as FIVE star category
(Note :- Example taken from Hotel industry to explain)

7. PRODUCT LINE
Meaning :- A product line is a group of products
that are closely related to each other by function,
customer group, market, or price range.
For example, a FMCG company's bath soaps product line.
For HUL, product line includes Pears, Lifebuoy, Hamam,
Santhoor, Jai, Moti, Lux, Dove, Rexona, Liril ….

8. PRODUCT MIX
PRODUCT MIX
- Set of all products and items that a particular seller
offers for sale
Example:
BPL
 Consumer products
- TVs, Washing Machine
 Cellular Services
- Mobile operations in Mumbai
 Telecom
- Instruments

9. PRODUCT MIX-CONCEPTS
Width
- How many different product lines are carried by the organization
P & G
 Five lines
- Detergents, Toothpaste, Bar soap, diapers, paper tissue
Length
 Total number of items in the mix
 Total items 25
 Average length of a line is 25/5 = 5

10. 3. Depth
 How many variants are offered of each product in the
line
Proctor and Gamble
 Crest Toothpaste
- Comes in five sizes
- Two formulations
 Mint
 Regular
Total Depth = 5 * 2 = 10

11. Consistency
How closely related the various product lines are in end
use, production requirements, distribution channels or
some other way.
Proctor and Gamble
- Very consistent
- Why
- Products are available through the same distribution
channels
HUL
- Products
 Fabric wash products
 Beverages
 Bath soaps

12. NEW PRODUCT DEVELOPMENT
Idea
Generation
Idea
Screening
Concept
Developm
ent
Market
Strategy
Developm
ent
Business
Analysis
Product
Developm
ent
Market
Testing
Commerci
alization

13.  Idea Generation Sources
 Internal Sources
 Customers
 Competitors
 Distributors and Suppliers
 Other Sources
 Idea Screening
 The purpose of screening is to spot good ideas and drop poor ones
as quickly as possible

14.  Concept Development and Testing
 A product idea envisions a possible product that company
managers might offer to the market
 A product concept is a detailed version of the idea stated in
meaningful consumer terms
 A product image is the way that consumers picture an actual
or potential product
 The task is to develop an idea into alternative product
concepts, determine how attractive each is to customers, and
choose the best one
 Concept testing occurs within a group of target consumers

15.  Marketing Strategy
 Includes information such as the target market and
product positioning as well as both short and long term
projections in terms of sales, profits and costs
 Business Analysis
 Business analysis involves a review of the sales, costs,
and profit projections to determine whether they satisfy
the company’s objectives

16.  Product Development
 The prototype must:
 Have the key features described in the product concept
statement, as perceived by the customer
 Performs safely under normal use
 Be produced for the budgeted costs
 Test Marketing
 The product and marketing program are introduced into realistic
market settings

17. COMMERCIALIZATION
 In launching a new product, a company must
make four decisions:
 When?
 Where?
 To whom?
 and How?

18. PRODUCT LIFE CYCLE
Time
Product
Develop-
ment
Introduction
Profits
Sales
Growth Maturity Decline
Losses/
Investments ($)
Sales and
Profits ($)

19. INTRODUCTION STAGE
 Introduction is a period of slow sales growth as the product
is being introduced into the market
 Profits are nonexistent at this stage due to high product
introduction expenses
 High failure rates
 Little competition
 Frequent product modification
 Limited distribution
 High marketing and production costs
 Promotion focuses on awareness and information
 Intensive personal selling to channels

20. GROWTH STAGE
 Growth is a period of rapid market acceptance and
increasing profits
 Increasing rate of sales
 Entrance of competitors
 Market consolidation
 Initial healthy profits
 Promotion emphasizes brand ads
 Goal is wider distribution
 Prices normally fall
 Development costs are recovered

21. MATURITY STAGE
 Maturity is a period of slowdown in sales growth
because the product has achieved acceptance by
most of its potential buyers
 Profits level off or decline due to increased marketing
outlays to defend the product against competition
 Declining sales growth
 Saturated markets
 Extending product line
 Stylistic product changes
 Heavy promotions to dealers and consumers
 Marginal competitors drop out
 Prices and profits fall
 Niche marketers emerge

22. DECLINE STAGE
 Decline is the period when sales fall off quickly and
profits drop
 Long-run drop in sales
 Large inventories of
unsold items
 Elimination of all nonessential
marketing expenses

23. How stages of the product life cycle relate to firm’s
marketing objectives & marketing mix actions
INTRODUCTION GROWTH MATURITY DECLINE
Product
Strategy
Distribution
Strategy
Promotion
Strategy
Pricing
Strategy
Limited models
Frequent
changes
More models
Frequent
changes.
Large number
of models.
Eliminate
unprofitable
models
Limited
Wholesale/
retail distributors
Expanded
dealers. Long-
term relations
Extensive.
Margins drop.
Shelf space
Phase out
unprofitable
outlets
Awareness.
Stimulate
demand.Sampling
Aggressive ads.
Stimulate
demand
Advertise.
Promote
heavily
Phase out
promotion
Higher/recoup
development
costs
Fall as result of
competition &
efficient produc-
tion.
Prices fall
(usually).
Prices
stabilize at
low level.

24. Five Profiles of Product Adopters

25. PACKAGING
The package = physical container or wrapping for a product
It is an integral part of product planning and promotion
 10% of the retail price is spent on developing,
designing, and producing just the package
Companies sometimes change packaging to update their
image and reach a new market

26. FUNCTIONS OF PACKAGING
1. Promoting and Selling the Product
2. Defining Product Identity
3. Providing Information
4. Expressing Customer Needs
5. Ensure Safe Use
6. Protecting the Product
The Keys to Product Packaging

27. 1. PROMOTING AND SELLING THE PRODUCT
Attractive, colorful, and
visually appealing
packages have
promotional value
A well designed
package is a powerful
selling device
because it helps the
product stand out
from its competitors

28. 1. PROMOTING AND SELLING THE PRODUCT
Mixed Bundling –
packaging different
products or services
together
 Usually the bundle
price is cheaper than
buying them
individually
Price Bundling – two
or more similar
products are placed
on sale for one
package price

29. 2. DEFINING PRODUCT IDENTITY
Packaging is sometimes
used to promote an image
such as prestige,
convenience, or status
Can be a crucial part of the
marketing strategy,
particularly in advertising

30. 3. PROVIDING INFORMATION
 Gives customer useful
information on:
 directions for using the
product
 its contents
 product guarantees
 nutritional value
 potential hazards

31. 4. EXPRESSING CUSTOMER NEEDS
When designing packages, companies analyze
customer lifestyles and create packaging that
meets their needs for size and convenience
Packages often come in various sizes
 Family size
 Single serving

32. 5. ENSURE SAFE USE
Proper packaging helps to eliminate
potential injuries or misuse of a
product
Formerly glass containers are now
plastic
Childproof caps
Tamper resistant packages
 Blisterpacks – packages with
preformed plastic molds surrounding
individual items arranged on a
backing

33. 6. PROTECTING THE PRODUCT
 Must protect during shipping, storage, and
display
 Prevent or discourage from tampering
 Prevent shoplifting
 Protect against breakage and spoilage

34. AIR TO SPARE
 Do you ever get frustrated when you
buy something and the package if
filled with more air than product?
Air To Spare

35. PACKAGING TRENDS
Aseptic Packaging –technology that
keeps foods fresh without
refrigeration for extended periods
Usually used to package food products
 canning
 bottling

36. PACKAGING TRENDS
Environmental Packaging
– recycled material,
less plastic, and safer
for the environment
Sun Chips Ditching New Bag

37. PACKAGING TRENDS
Cause Packaging – promote social and
political causes
 May be totally unrelated to the product

38. LABELING
Label – an identification tag,
wrapper, seal, or imprinted
message that is attached to a
product or its package
 Main function is to inform
customers about a product’s
contents and give directions for
use
 Protects businesses from legal
liability if someone if injured while
using the product

39. THREE KINDS OF LABELS
1. Brand Label – gives brand name and
trademark or logo
2. Descriptive Label – give information
about product use, construction, care,
performance, and other features
3. Grade Label – states the quality of a
product