Product and Brand Management Point Notes:

Module-1
Introduction to Product Management:
Definition:
Product management is an organizational function within a company dealing with new product
development, business justification, planning, verification, forecasting, pricing, product launch, and
marketing of a product or products at all stages of the product lifecycle.

Roles of Product Manager:

1. Must manage agendas of all functional groups while staying focused on key
brand/corporate objectives
2. Planning Activities:
 Annual Business Plans:
1. Collect & Analyze product & category data
2. Use analysis to develop marketing strategies
3. Internal Selling:
 Coordinating with other areas of the corporation to execute programs (ie R&D,
Graphics & Promotion, and Research etc.)
 Keeping Senior Management informed and supportive
4. The product manager has broad/heavy responsibility but virtually no authority per se
(except the “authority” that is derived from the plans which have received approval by
senior management)

Organizational structure:
 PM’s Job depends on how the organization is structured
We explore 3 Organizational structures;
1. Product-Focused Organizations
2. Market-Focused Organizations
3. Functionally Focused

1. Product-Focused Structure:
 Product Manager Acts as a “mini-CEO”
 Takes responsibility for overall health of a brand
 Well Defined Hierarchy exists (i.e. Group product Manager, Brand manager,
Assistant Brand Manager)
Advantages
 Locus of responsibility is clear (directly accountable for brand)
 Invaluable training & experience for PM
Disadvantages
 Inability to ask fundamental questions (too close)
 PM is may become somewhat removed from the action in the field
 Short-term focused
2. Market-Focused Organization:
 Defines authority by Market segment
 Segments can be industry, channel, regions of the country or customer size
 Useful when there are significant differences in buyer behavior among the market
segments
Advantages
 Strong Customer Focus
 Easier to get Product Managers to ‘pull together’
 Better knowledge of company’s line of products
Disadvantages
 Does not give managers full responsibility for products services (more coordination)
 Lose ‘mini-CEO training’

3. Functionally-Focused Organizations:
 Align themselves by functions (i.e. Advertising, Sales, merchandising)
 No Single person is responsible for the day-to-day health of a brand
 CEO & Vice Presidents (VP’s) make marketing strategy decisions
 Strategies are implemented through discussion & coordination among functional
groups
Advantages
 Administratively simple
 Functional training is strong
 CEO & VP’s make important strategy decisions
Disadvantages
 Limited responsibility for specific products
 Conflicts b/w strategies can only be resolved through discussion – time consuming
 Narrow scope of managers – limits development
Competition & Product Strategy:

The changing business environment

• Accelerating technological change

• Globalisation
• Mergers, acquisitions and strategic alliances
• Demographics
• Deregulation and privatisation
• Changes in business practices – downsizing, outsourcing, re-engineering etc.
• Ethical and ecological concerns

Three roads to competitive success:

• Build a better product at the market price.
• Build the same product at a lower price.
• Create a monopoly through a customer franchise.

Environmental change:
 All firms compete within the same macro-environment.
 The nature of this environment is determined by a wide variety of factors usually
summarised as:
1. Political and legal
2. Economic
3. Social
4. Technological
Most predictions of environmental change are based on the assumptions that, ultimately, supply
is fixed but that demand will continue to grow.
As ‘Demand’ is determined by the size of the world’s population it is clear that, if the former
assumption is correct, then the latter cannot be – an outcome predicted by Malthus in 1797.
Fulfilment of Malthus’ prediction has been deferred largely as a result of technological
innovation or, in marketing terms new product and process development
Technological innovation is both an evolutionary and a revolutionary process.
Evolution is essentially a gradual and cyclical process whereby more successful species displace
less successful ones – the survival of the fittest.
However, this cycle may be punctuated by dis-continuities which have a major impact on the
process.
A consequence of this is that all phenomena have a Life cycle.
In business the ‘survival of the fittest’ is determined by the forces of competition.
These forces have been summarised by Porter (1979) as:
1. The threat of new entrants
2. The threat of substitution
3. The bargaining power of suppliers
4. The bargaining power of customers
5. Rivalry between current competitors
Analysis of these forces confirms that differentiation is the key to survival.
In competing with one another firms have only a limited number of strategic options
available to them. These were identified by Ansoff (1957) in a Growth Vector Matrix.

Five alternatives are open to the firm when competing through products based on:
• Product proliferation
• Value
• Design
• Innovation
• Service
Extended Product life cycle:

PLC:
The product life cycle (PLC) is
‘A generalized model of the sales trend for a product class or category over a period of time, and
of related changes in competitive behaviour’.
- (Buzzell)

The stretched product life cycle contains seven stages:

1. Gestation or new product development.
2. Launch or introduction.
3. Growth
4. Maturity
5. Saturation
6. Decline
7. Elimination
Managerial Implications of PLC:
 The concept of the PLC is firmly rooted in the concepts of the biological life cycle
and of evolution
 It reflects 4 underlying processes.
1. Competition
2. Substitution or displacement
3. The survival of the fittest
4. The inevitability of change
 It also reflects a number of what may be considered useful generalizations if not
eternal truths, namely:
1. Needs are inborn and enduring
2. Wants are learned and ephemeral
3. The great majority of actions are motivated
by self-interest
4. The act of consumption changes the customer
When a life cycle reaches a limit of growth three basic options exist:
 A way round the limit cannot be found and the process goes into decline.
 An equilibrium is established and the life cycle
is stretched or extended.
 The limit is broken and a new growth phase
is initiated.

Criticism of PLC or Arguments against of PLC:
1. The conceptual arguments against the PLC are:
• Products are not living things, hence the biological metaphor is entirely misleading.
• The life cycle of a product is the dependent variable, being a function of the way in which
the product is managed over time. It is certainly not an independent variable.
• The product life cycle cannot be valid for product class, product form and for brands
indeed, an important function of a brand name is to create a franchise that has value over
time, permitting changes to take place in the product formulation.
• Trying to fit product life cycle curves into empirical sales data is a sterile exercise in
taxonomy.
2. The main operative arguments against the PLC include:
• The four phases or states in the life cycle are not clearly definable.
• It is impossible to determine at any moment in time exactly where a product is in its life
cycle hence:
• The concept cannot be used as a planning tool.
• There is evidence that companies who have tried to use the product life cycle as a
planning tool have made costly errors and passed up promising opportunities.
Operationalizing the PLC:
Doyle (1999) distinguishes 6 possible levels of definition.

But, even if everyone accepted Doyle’s definitions, the problem remains. Managers are seduced
by the consistency of the S-shaped logistic growth curve into the expectation that it can be
converted into a precise formula which will predict accurately the behaviour of individual brands
in a market.
The persistent belief is ingenuous. The PLC is a post-facto generalisation about observed
outcomes for successful innovations. It cannot tell you in advance which innovation will achieve
this status.
The PLC is a tool which encourages strategic insight, policy formulation and long term strategic
planning. It is not a tactical device.

Product Portfolio:
Concept:
• Portfolio analysis is a set of techniques that helps an organization, particularly having
many businesses/ products, in making strategic decisions with regard to individual
businesses or products in its portfolio. It was introduced in strategic management in mid
1960s and since then, many approaches of portfolio analysis have been developed.
Shell’s Directional Policy Matrix:

 Divestment: - A business with weak capability and unattractive business prospects

usually incurs losses at the present and the situation is likely to continue in future too.
 Gradual withdrawal :- such businesses which fall in quadrant 2 with weak
capability and average business prospects, or in quadrant 4 with average capability
and average business prospects may be divested in phases as these business are not
likely to earn enough as compared to other business in the portfolio.
 Take a risk: - The business prospects but weak capability may have two alternatives.
Either the business is strengthen by allocating additional resources to take the
advantages of the attractive business prospects, or if it is not possible to allocate
additional resources, it is advisable to divest.
 Maintain or look for growth: - the business falling under average capability and
average business prospects has two alternatives. Either the organization may bear
with the situation and make good the overall position with the help of other
businesses, or it may divest this to concentrate on other businesses.
 Try Harder: - the business which has average capability that attractive business
prospects needs additional resources to strengthen its capability so as to take the
advantage of attractive business prospects.
 Cash Generation: - the business which has strong capability but unattractive
business prospects may be used for cash generation and no further investment is
required because of unattractive business prospects.
 Look for growth: - the business with strong capability and average business prospect
requires additional investment in the form of product innovation through R&D and
 creation of additional production capacity so as to fight in the market to increase
market share.
 Market leadership: - the business with strong capability and attractive business
prospects may be used to become market leader by allocating additional resources
and, once market leadership is established by innovation, to maintain leadership
position.

New Product Development:

Definition:
 New product development (NPD) is the complete process of bringing a new product
to the market till its consumption & feedback from the end user of the business chain
through the systematic procedure & parameter.
 It may be a Consumable product, service or idea.
 New product development (NPD) is the complete process of bringing a new product
or service to market.
 New product development may be done to develop an item to compete with a
particular product or may be done to improve an already established product.

Why New Products?

 New product development is essential to any business that must keep up with market
trends and changes.
 Approximately one-third of the revenue a business generates is coming from products
they did not sell five years ago
 Changing environment creates new demands and needs.
New Product Categories:
 New to the world product
 New product lines
 Product line extensions
 Improvements and revisions to existing products
 Repositioning’s
 Cost reductions
New-Product Development Process:
1. Idea generation
2. Idea screening
3. Concept development and testing
4. Marketing strategy development
5. Business analysis
6. Product development
7. Test marketing
8. Commercialization

1. Idea generation:
1. Internal sources:
i. Company employees at all levels.
2. External sources:
i. Customers
ii. Competitors
iii. Distributors
iv. Suppliers Outsourcing (design firms, product consultancies, online
collaborative communities)
2. Idea screening:
1. Process used to spot good ideas and drop poor ones.
2. Executives provide a description of the product along with estimates of market
size, product price, development time and costs, manufacturing costs, and rate of
return.
3. Evaluated against a set of company criteria for new products.
3. Concept development and testing:
1. Product idea:
Idea for a possible product that the company can see itself offering to the market.
2. Product concept:
Detailed version of the new-product idea stated in meaningful consumer terms.
3. Concept testing:
Testing new-product concepts with groups of target consumers to find out if the
concepts have strong consumer appeal.
4. Marketing strategy development:
1. Part One:
i. Describes the target market, planned value proposition, sales, market
share, and profit goals.
2. Part Two:
i. Outlines the product’s planned price, distribution, and marketing budget.
3. Part Three:
i. Describes the planned long-run sales and profit goals, marketing mix
strategy.
 5. Business analysis:
1. Involves a review of the sales, costs, and profit projections to assess fit with
company objectives.
2. If results are positive, project moves to the product development phase.
6. Product development:
1. Develops concept into a physical product.
2. Calls for a large jump in investment.
3. Prototypes are made.
4. Prototypes must have correct physical features and convey psychological
characteristics.
5. Prototypes are subjected to physical tests.
7. Testing marketing:
1. Product and marketing program are introduced in a more realistic market setting.
2. Not needed for all products.
3. Can be expensive and time consuming, but better than making a major marketing
mistake.
8. Commercialization:
1. Must decide on timing (i.e., when to introduce the product).
2. Must decide on where to introduce the product (e.g., single location, state, region,
nationally, internationally).
3. Must develop a market rollout plan.

Reasons for New Product Failures

 Poor marketing research
 Technical problems
 Insufficient marketing effort
 Bad timing
 The wrong group was targeted.
 Unrealistic forecast.
 Insufficient level of awareness.
Managing New-Product Development:
1. Customer centered new-product development:
Focuses on finding new ways to solve customer problems and create more customer-
satisfying experiences.
2. Team-based new-product development:
Various company departments work closely together, overlapping the steps in the product
development process to save time and increase effectiveness.
3. Systematic new-product development:
 Innovation management systems collect, review, evaluate, and manage new-product
ideas.

Module-2
New Product Strategy:

 Need for Product Innovation Strategy:

(Advantages and Dis-advantages of NPD)

 The components of new Product Strategy

1. Technological Newness
It is helpful to distinguish between Invention and Innovation, although they are often
used in tandem. An Invention is a technical phenomenon involving the discovery of
some new principle, unlike an Innovation which is an economic phenomenon
involving the commercial use of new products or processes. It follows that for an
Invention to become an Innovation, it must have some market value that is the value
that someone is willing to pay for.
 a. Technological Forecasting
b. Managing R&D

2. Market Newness
With respect to newness, markets can be viewed in to two ways: 1. In relation to
technologies and 2. In relation to the firm.

Commercialization:

Having established that the new product will deliver the promised benefits and that a need still
exists for it in the marketplace, the next step in the process is to launch the product and make it
available to intended customers. This phase is known as commercialization.

Stages of Commercialization:

1. Complete final plans for production and marketing

2. Initiate co-ordinated production and selling programmes
3. Check results. Make necessary improvements in product, manufacturing, or sales

Launching a new product involves consideration of all the elements of the marketing mix and
that combination of price, promotion and place, or distribution that will optimize the chance of
success.

Essentially, the choice is between one and other of two basic strategies:
• Market penetration
• Roll out

1. A strategy of market penetration is to be preferred when:

 There is a strong likelihood of competitive reaction.
 The new product is relatively easy to clone.
 The launch company has the resources to finance a large scale effort

2. A rollout strategy is to be preferred when:

 The firm has limited resources and needs to grow through organic development.
 The firm enjoys a sustainable competitive advantage.
 There is only a limited threat of competitive reaction.
 Where a rollout strategy is feasible some form of test marketing is often recommended

Test Marketing:
Test marketing may be defined as a small scale trial of the proposed marketing mix in a sub-
market believed to be representative of the larger regional or national market. Its objectives may
be both mechanical and commercial.
 Four basic factors govern the selection of a launch strategy:
1. The degree of novelty
2. Existing familiarity with and position in the intended market
3. Current status of competition and response expected to the launch
4. The resources available
Test Marketing;
 Recruit Subjects
 Test attitudes and beliefs
 Expose subjects to advertising stimuli
 Subjects left to purchase
 Subjects interviewed
 Subjects may be post -contacted
Pitfalls of Test Marketing
 Failure to decide what is to be tested
 Failure to base test market plan on overall
 Failure to make comparative tests
 Failure to establish benchmarks in test area
 Lack of time

Managing Growth:

 Resistance to Change:

 Leveraging New Product Growth:

 Sustaining Differentiation:
 Module-3

Branding & Brand Management: