PRODUCT MANAGEMENT

FINAL HANDOUT

NAME:_________________________________ STUDENT ROLL NO:______

COURSE/ YEAR & SECTION:________________

I. PRODUCT PLANNING

What is a product?
A product is anything that can offered to market for attention, acquisition, use,
consumption that might satisfy a want or need -Philip Kotler
Products can be both tangible (mobile phones) and intangible (service by a doctor).
To create successful new products, the company must- understand it's customers, markets
and competitors.

WHY PRODUCT FAILS?

• Doesn't match current company objectives
• Incorrectly positioned, priced, or advertised
• Overestimating market size
• Poor marketing research
• Obsolete
• No longer profitable
• Excessive development costs

What is a product planning?

Product planning - is the process of creating a product idea and following through on it
until the product is introduced to the market. Product planning entails managing the product
throughout its life using various marketing strategies, including product extensions or
improvements, increased distribution, price changes and promotions. It starts with the
generation of idea and continues till the time the product is ready to be launched in the
market.

Benefits of product planning:

Efficient Service to Customers- enabling production to be conducted in
accordance with the time schedules and therefore deliveries are made on promised
dates.
Coordination- It serves to co-ordinate the activities of plant and results in a
concerted effort by workmen.
Effective Utilization of Resources- It reduces the loss of time by the workers
waiting for materials and makes most effective use of equipment.
Cost Reduction- Production control programmes minimizes the idleness of men
and machines.
Avoidance of Bottlenecks- The incomplete work does not get accumulated.

Why to develop new products?

o to replace declining product
o to take advantage of new technology
o to defeat rivals
o to maintain/increase market share
o to maintain competitive advantage
 PROCEDURE FOR PRODUCT PLANNING

Determine Determine Determine

Idea
corporate product policy criteria for
generation
objectives evaluation

Development Research
Research of Product
of product for product
market testing

Introduction
Engineering of
of product in
production
market

• Determine corporate objective

- Every firm must work within the framework of certain objectives. Therefore, it is
important that the objectives are clear and there is no ambiguity. It is vital for
the success of the firm to function within the ambit of its objectives.

OBJECTIVES

SHORT TERM LONG TERM

-increase sales -growth

-increase profit -customer satisfaction

• Determine product policy

- A company must analyze its weaknesses and strengths with respect to its history,
personnel and resources. Every firm has limited resources therefore it is vital that
the resources are put to their most productive use.

• Development of new ideas

- "Dreamers are mocked as impractical. The truth is they are the most practical,
as their innovations lead to progress and a better way of life for all of US."
-Robin S. Sharma
- Innovation is the way forward in todays world of cut throat competition. Only
the companies with new idea would be able to survive in todays world.
- Idea generation ranges from incremental improvements to existing products
to new to the world products.
Sources of new ideas:
1. INTERNAL
- EMPLOYEES

2. EXTERNAL
- CUSTOMERS
- COMPETITORS
- DISTRIBUTORS
- FOREIGN FIRMS

• R&D for product

- Nowadays almost every organization has a separate department for R&D this
itself implies its importance.
- The world is dynamic and is changing every second thus it is important to
adapt to the changing world to stay in competition and for this research is
required.
- Developed countries spend huge amount of their resources on R&D.
- Development includes the ability of adaptation of others idea to cater the needs
and requirements of a company.

• Concept testing
- Idea has to be developed into a concept
- A concept is a detailed version of the idea stated in a meaningful consumer
terms.
- The developed concept will be tested among a sample of consumers.
- This will be presented to the target market in words or pictures or a prototype
of the product is made.
- Few questions will be asked to check whether the target market will buy the
product.
- Concept testing of prototypes can help avoid costly mistakes.
- This helps in knowing the reaction of the customers upon the launch of the
product and whether they will find it useful or not.

• Market research / Test marketing

- Understanding the market is of utmost importance, market offers various
opportunities and threats and it is important to grab the opportunities at the earliest.
- During the test marketing, the marketers offer the product for sale in a limited area
where they can measure the response.
- Based on the results of test marketing, marketers determine how the marketing mix
should be adjusted before a full scale launch.

How market research helped Instagram

Kevin Systrom and Mike Krieger put a full year of work into a new location-based, check-in
app called Burbn, even developing a full-fledged iPhone app. After releasing the app, the
team wisely chose to reevaluate the market. "If felt cluttered, and overrun with features,"
Systrom said. He and Krieger also faced reality: they were late to the game in a trendy
space already dominated by Foursquare. They removed almost all of their features, leaving
only photos, commenting, and liking. They rebranded their business as Instagram.
By looking closely at the market, understanding their strengths, and researching
competitors, they were able to make the right call.
Facebook bought Instagram in late 2012 for nearly three quarters of $1 billion in cash and
stock
 • Engineering the production
- If the market research shows a positive sign then the next step is to arrange for
resources (manpower, machinery, money, material etc.) which would be required
for the production process.
- In this the final decisions regarding the production of the product are taken.
- Decision regarding the price, promotion and advertisement of the product are also
taken.
- Price plays a very important role in the sales of the product therefore the price
should neither be to high nor too low.

• Launch of the product

- This is the last step in the procedure of product planning.
- Product is finally launched in the market this has to Be supplemented by a good
- advertising plan so that all consumers are aware about the launch of the product
and how it would help them.

II. PRICE PLANNING

What is price?
Price is the value in money placed on a product or service.

Bartering

- the exchange of a product or service for another product or service without the
use of money.
- oldest form of pricing.
- the purpose of price is to quantify and express the value of the items in a
marketing exchange.

PRICE/ VALUE
Price establishes/maintains a firm's competitive advantage, image, and profits
Customers use price to make judgments about products
- A higher price=better quality and prestige
- A lower price=more for your money
- Price is a key element in the marketing mix because it relates directly to the
generation of total revenue.

What is the Goal of Doing Business?

Primary goal is to earn a profit or a high return on investment (ROl)
Return on investment is a calculation that is used to determine relative profitability.
Equation: Rate of return=Profit/Investment

Other Goals of Doing Business:

 • Gaining market share
Market share- a firm's percentage of the total sales volume generated by all
competitors in a given market.
To increase market share, a business must take business away from
competitors.
Market position- the relative standing a competitor has in a given market in
comparison to its competitors.

• Increasing Market Share

- Meeting the competition-When a business simply aims to meet the prices of their
competition.
- Companies meet the prices of their competition by:
- Following the industry leader or
- Calculating the average price and position their product price near the average.

What is price competition?

Price competition- giving emphasis to price by matching or beating competitors'
prices.

Price Wars
- intense competitive rivalry accompanied by a series of price reductions.
- one competitor will lower its price, then others will lower their prices to match.
- if one of them reduces their price again, a new round of reductions starts.
- in the short-term, price wars are good for consumers, who can take advantage of
lower prices.
- for the companies involved, the lower prices reduce profit margins and can threaten
their survival.
- Overall, price wars can substantially weaken a market, and consumers tend to not
be brand loyal, switching to the lower priced product each purchase.

NonPrice Competiton
Nonprice Competition- emphasizing factors other than price to distinguish a product
or a business from competing brands or other businesses
Examples: product features, service, product quality, promotion, packaging,
etc.
Major advantage: more easily build brand loyalty because price differentiation is
typically not an issue.
Distinguish themselves through unique characteristics.

Businesses that use nonprice competition will heavily promote their unique
characteristics to establish its superiority and to set it apart from competitors in the
minds of consumers (positioning).

What is pricing objectives?

- overall goals that describe what a firm wants to achieve through pricing.
- must be consistent with the organization's overall mission and goals
1. Survival Objective
- a fundamental pricing objective is survival in the marketplace.
- businesses can use pricing to meet expenses by lower prices (sale) to increase
cash flow.
 2. Profit Objective
- profit maximization
- difficult to attain and to measure so 'satisfactory' levels are usually set by
upper management.
- stated in terms of actual dollar amounts or in terms of change compared to
a previous time period.
3. Return on Investment Objective
- a calculation that is used to determine relative profitability.
- return on Investment Equation: Profit / Investment
4. Market Share Objective
- a business's percentage of the total sales volume generated by all
competitors in a given market.
- market share and product quality heavily influence profitability.
- so, marketers usually use an increase in market share as a primary pricing
objective.
5. Cash Flow Objective
- setting prices to recover cash as soon as possible.
- although acceptable in some instances, the use of cash flow and recovery as
a pricing objective can be very dangerous.
6. Status Quo Objective
- can focus on several dimensions, including maintaining market share,
meeting competitors' prices, achieving price stability, and maintaining a
favorable public image.
7. Product Quality Objective
- if a business wants to achieve or maintain a quality position, a high price is
often needed to cover the costs associated with it.
- products and brands that consumers perceive to be of high quality are more
likely to survive in a competitive marketplace.

INDIVIDUAL ACTIVITY
Answer the following questions:
1. Why is understanding customers, markets, and competitors crucial for creating successful
new products?
2. What role does R&D play in the product planning process?
3. Describe the concept of bartering and its relevance in today's market.
4. What are the main reasons why new products fail in the market?
5. Explain the concept of price competition and its potential impact on profit margins.
GROUP ACTIVITY
Title: “PASS THE DRAWING, GUESS THE WORD”
1. Go to your respective groups.
2. Within each group, arrange participants in a line.
3. Provide the starting participant of each group with a product and price planning-related
word or phrase they need to draw.
4. The first person in each line has a limited amount of time to draw the assigned product
and price planning word/phrase on a piece of paper.
5. After completing the drawing, the first person passes the drawing to the next person in
line within their group.
6. Participants must wait until the drawing reaches the last person within their group before
guessing.
7. The last person in each group line guesses the product and price planning word or
phrase based on the drawing.
8. Once the guessing is done in each group, reveal the original word/phrase to compare
with the guesses.

Prepared by: Ancheta, Mariel Nicole Bustamante, Daisyre

Group 1 Caacbay, Angely Mae
Apaga, Heart
Barcela, Rachel Maxine Castillo, Lowin
Biay, Ivan Cera, Camille