PRODUCT MANAGEMENT - BASICS

What is a Product? Goods Services Experiences Events Persons Places Properties Organizations Information Ideas

PRODUCT AND PRODUCT MIX

Potential customers judge product offerings according to three elements:
Product features and quality Services mix and quality Value-based prices

CUSTOMERS VALUE HIERARCHY

Product quality dimensions

Product based classifications

Durable products - last for many uses and over a long period before having to be replaced.
Non-durable products - can be used once or a few times before having to be replaced. Service products - intangible products comprising activities, benefits or satisfactions that are not embodied in physical products, e.g. financial services, holidays, etc.

Durable products

Perishable goods

services

User based classifications: consumer goods/services

Convenience goods - relatively inexpensive, frequent purchases which respond to routine response buying situations.
Shopping goods - represent more of a risk and an adventure to consumers. Speciality goods - high risk, expensive and infrequently purchased products.

Unsought goods - e.g. sudden emergencies.

Convenience goods

Shopping goods

Speciality goods

UNSOUGHT PRODUCTS
FIRE INSURANCE

MEDICINES

User based classifications: B2B goods/services

Capital goods - buildings and fixed equipment that contribute to production.

Accessory goods - items that give peripheral support to the production process. Raw materials. Components parts.

Consumable Supplies

Capital goods

accessory
Car accessories Machine parts

Raw materials
Iron & steel industry raw material

Textile industry cotton yarns

Components parts

Consumable Supplies

The Product and Product Mix

Product Classifications Durability and tangibility
Consumer goods Industrial goods Nondurable
Tangible Rapidly consumed Example: Milk

Durable
Tangible Lasts a long time Example: Oven

Services
Intangible Example: Tax preparation

The Product and Product Mix

Product Classifications
Durability and tangibility Classified by shopping habits:
Convenience goods Shopping goods Specialty goods Unsought goods

Consumer goods
Industrial goods

The Product and Product Mix

Product Classifications
Durability and tangibility Consumer goods Materials and parts
Farm products Natural products Component materials Component parts

Industrial goods

Capital items
Installations Equipment

Supplies and business services

Maintenance and repair Advisory services

The Product and Product Mix

Product mix dimensions:
Width: number of product lines Length: total number of items in mix Depth: number of product variants Consistency: degree to which product lines are related

Standardisation Vs Adaptation
In international markets, success depends on satisfying the market demands. The product or service must be suitable and acceptable for its purpose.

According to Doole & Lowe (1999, p.296), The main issue for a company about to commence marketing internationally, is to assess the suitability of the existing products for international markets. Product policy abroad: firm must decide which aspects of a product need to be adapted and which can be standardised.

Standardisation Vs Adaptation
Standardisation policy: offering a uniform version of a product in all of its foreign markets.

Adaptation policy: offering a product to targeted foreign consumers altered to specific tastes, preferences and needs. Adaptation can concern all the characteristics of the product.

Decision between standardisation and adaptation is not mutually exclusive rather it is a matter of degree
A certain degree of adaptation of a product is required in international markets.

Standardisation Vs Adaptation
McDonalds example: Pork in India!

Advantages to pursuing a standardised approach: cost economies, a consistent brand image and simplification of planning and control.
Standardising a product can ultimately lead to failure. Main advantage of an adaptation policy is probability that sales and revenue will be increased due to appropriateness to the specific needs of the markets. The major drawback is the complex organisation and implementation issues of a product adaptation policy in all foreign markets. Ultimately, the individual company will decide

Product Development
Eleven Critical Success Factors

Offers a unique, superior product value to the customer

A strong market orientation Incorporating international orientation in product The right organisational structure

The support of top management

Product Development

Leveraging core competencies

Projects aimed attractive markets do better

Focusing on a few projects Resources must be in place to implement the projected plan
Speed at developing products

High quality, disciplined and systematic new product process

The Product Life - Cycle

Levels of the cycle
Life cycles for different products of the firm Life cycles for different countries International product lifecycle

Strategic Options
1. 2. 3. 4. 5. Product improvements Repositioning of the product Increase the reach of the product to new users Promote more frequent use of the product Promote new uses of the product