Lecture 07: Product Management & Concepts Associated with Product

Hello friends welcome back. Moving  from terminologies to concepts so that

we can take everything towards management of  product, let us go ahead with our discussion

wherein we were trying to build up our  understanding around terms and terminologies.

Here are few terms which have a strong overlap  to be taken as concepts also, so although I

refrained from introducing product innovation  and the related elements as concepts, but

here there are two elements at least which must  be seen as terminologies as well as concepts

with reference to a product. First is product  positioning. One of the most important elements

in marketing and most important element in  relation to the existence of a product.

Product positioning is the way consumers, users,

buyers and others view competitive brands or  types of products. A beautiful description

is given by Reis and Trout wherein, as determined  by market research techniques the various products

are plotted onto maps using product attributes  as dimensions. This use of product positioning

is perceptual and not necessarily valid  as based on measured product attributes.

How a consumer actually conceives a product?  And when you are conceiving a product that means

putting up the image in the minds of the  consumers. Positioning a product is about creating

an image in the minds of the consumers and  that image can connote with a name, symbol,

a product itself or let us say generic name  also. For example, when you say a pair of jeans

then a particular name and a brand may come to  your mind and that is where that brand might enjoy

a particular positioning in resonance with the  product or generic product itself. For example,

one says calcium and one particular brand of  calcium comes to your mind. One says protein

supplement and one particular brand comes to you  and one says tea a particular brand comes to you

and that is where you know positioning comes in. Or let us say when a symbol is brought to you,

a name is brought to you and the image  of the product comes to your mind. So,

that is the perspective around positioning it.  It s an important thing or should I say that it

is one of the most important concentration points  for marketers and especially the product managers.

How would this product stay in the minds of my  customers? is a prominent question and we will be

spending quite a bit of time on this concept later  on when we will be talking about management.

Till then just have this thing in mind and try  and analyse, when someone says burger, then what

comes to your mind and when someone say  McDonald s what comes to your mind? So,

you look at it with several kinds of  perspectives when someone says school,

a teacher comes to your mind, the school comes  to your mind, the playground comes to your mind

but what is coming to your mind, when someone  says IIT probably technology comes to your mind

and is there any scope for management program  because we have a very good management program

at IIT Roorkee. So, let us see how things  are? Then comes in the product life cycle.

The four stages that a new product  is thought to go through from birth

to decline where it vanishes off the surface or  should I say it completely changes the form.

Those stages are related to introductory  stage, growth stage, maturity and decline.

There are several thoughts around the product  life cycle perspective. Is it so predictable

or there are (what are those) elements which  drive a product's life cycle? We will be talking

about that in detail. It is a wonderful  concept was propounded and propelled by

Theodore Levitt a very eminent management  philosopher and a thinker of our times.

So, you see product life cycle has four premises,  wherein, one is that products have a limited life

and I am not talking of brand here and when I  say product life cycle please do not let your

thoughts go away towards a particular kind of  a name because there you would find that name

stays even when a product is no more there. So, we  are talking of product here actually and I will be

elaborating that when I would be referring  to product life cycle in detail for you.

So, the second element of the four premises we  have is that this product s sales pass through

distinct stages and each stage has different  implications for the seller. So, it is a marketer

with the seller s perspective who is associated  with the life cycle of a product actually.

Then profits from the product vary at  different stages in the life cycle. Now,

that is again to be discussed and then a product  requires different strategies at different stages

of a product s life cycle. Definitely it has to be driven and has to

be driven with a different perspective in every  stage of the life cycle and we will be talking

about this when we talk of how it is introduced,  how it grows, how it may stabilize or mature

or stay at one point and then many products  go through a decline stage and then I will

be introducing several elements of some stages  between introduction and growth and how decline

can be reversed. Can it be done that way? There are several beautiful stories around

that. There are beautiful examples on that and  till then just keep thinking on those terms.

Till then please also remember that, which of  those products are there which, you have seen

after a long time, that is they were there, they  vanished for a while, they came back and they look

like as if they are in a newer form. So, have  you noticed these kinds of products around you?

If you have then definitely the marketers and the  product managers have rejuvenated those products

and we will be talking about that. Now let us  go for an overview on product management.

According to the association of international  product and marketing managers, (it is a big

organization which keeps on talking about  product management, they have their website

we have given the reference  for you so that you can think

about this discussion in detail and so that  you can visit that website and may further

go into the details) product management  is the process of conceiving, planning,

developing, testing, launching, delivering  and withdrawing products from the market.

Further, the association of international  product and marketing managers suggests

that it is an organizational function within a  company dealing with the thoughtful and proactive

management of a product or group of products  throughout all the stages of product life

cycle. That is how they describe product  management. So, here we will be focusing

upon the stages which they have given and we  will be talking about those stages a bit.

But, look at this second element  that is organizational function

dealing with thoughtful and proactive management  of a product or group of products throughout

all these stages of product life cycle (which  we have just seen that is introductory,

growth, maturity and even decline stages)  require management. Now, you see professor

Lehmann in his book which is a very important  contribution to the field of product management,

introduced product management from the perspective  of product manager s duties which are: first the

product manager is responsible for the planning  activities related to the product or product line,

and that is how a product manager conceives what  a product would be and what the product line would

be? That means where and how the product would  emanate into a different form and variety.

We have talked about a product line and that  is what I was referring to when we introduced

you with the terms which now are emanating into  concepts and the concepts would be going towards

our understanding towards the management and I  am sure that by this time when I am referring to

product line as given in this book you  understand what I am talking about.

Now does product manager s job involves  analysing the market including customers

competitors and the external environment  and turning this information into marketing

objectives and strategies for the product? It  is a composite statement and this is the part of

most of the course ahead of us and  that is what is product management

is actually all about? And we will be  talking about this in extensive details.

Second, a product manager  must get the organization

to support the marketing programs  recommended in the plan. This may involve

coordinating with other areas of the firm such  as research and development for product line

and product line extensions, manufacturing,  marketing research and finance. It also involves

internal marketing of the product  to obtain the assistance and support

of senior managers in the firm and so on. So, you see this description with the perspective

of responsibilities of a product manager actually  describes product management. And please remember,

when it says that the job involves  analysing the market, the whole scenario

including customers, (obviously  the king of the scenario)

competitors and the external environment, the  technological changes, the rules and regulations

and so on and many elements associated with that.  Now, let s talk about the elements described by

international product and marketing  managers association.

They talked about conceiving,  planning, developing, testing,

launching, delivering and withdrawing and that  can also be understood with the perspective

of such examples like an automotive and  one of my favourites is Mahindra Scorpio.

We will go into the details of that narrative  later on as well wherein, there are lots of

published stories about how that particular  product was conceived and Dr. Pawan Goenka was

strongly instrumental in bringing that product  alive. A very eminent marketer and a designer,

he and his team structured and designed almost  everything around a successful automotive.

Conceiving, planning, and developing Scorpio,  testing it, launching it, delivering it,

and not yet withdrawn it is growing actually. So now, you see a toothpaste for example Dantkanti

came into being and actually overwhelmed the  market. I remember there was a time whenever

I used to ask someone that have you used this  toothpaste people used to say yes despite of so

many options, we have had. It was conceived well,  the product was planned well, developed and tested

and brought in, launched well and delivered  to the customers. There are narratives about

how it happened, which is for the later part. This is because, we must be talking about such

stories to understand how it happened  but at this moment just to introduce

you with such examples and till that time when  I come back to you with those kinds of stories

just go and surf on the websites and you  would realize what we are referring to here.

And then there are several withdrawn  products and I cautioned you earlier

I would not call them failures. They were not so well accepted by the

consumers and customers somehow because a match  in terms of need and the product in the final form

could not gel with each other. So, we have several  examples around us and you know about those better

so just surf through those withdrawn products  wherein, I have already given you the linkages and

references earlier as well. Now, one of the most  important concepts associated with a product.

The levels associated with customer value  generation and these five levels constitute

a customer value hierarchy and these five circles  wherein, you can see that there is core benefit,

basic product, expected product, augmented  product and potential product. It is an important

description which, must stay in the  minds of a product manager all through

her life, basically, because one must have his  eyes on core benefits for a customer.

The core product or core benefit is the central  most benefit or the reason or the purpose for

which a consumer buys a product. Pencil is  bought for writing, pen is bought for writing,

so the core product varies from purchaser to  purchaser and then this you can find in further

details in American Marketing Association  website as well. Now, comes the fundamental

need or want that consumers satisfy  by consuming the product or service.

How is it done? By understanding the benefit  of the product behaviour performance.

So, core products benefits range from tangible  to intangible and that you can feel directly.

So, keep the word purpose of the product in your  mind. See for example a customer who buys an air

ticket from an airline is looking to fulfil his  or her core need to travel from one destination

to another destination which is fundamental. So,  you have to fly from this place to that place

that is the core benefit you are looking for. Then comes in basic product. You see when you say

at least this should be there that is  what is a basic product is. Please take

note that once we would be talking about product  life cycle, pricing associated with that and how

product becomes brand then this concept would  be very useful for us also when we would try

to say that within the same product line there  would be a differentiation between as far as the

basic product and the potential product and  you can differentiate the target as well. I

mentioned that when I was talking about product  line. Please look into that video and again that

would resonate some thoughts in your minds. So,  you see basic product element is that these are

the product elements that the customer will use to  evaluate and make choices, the product features,

quality level, brand name, styling and packaging.  These become the means of evaluating alternatives

for a customer and the marketer must turn  the core benefit into a basic product.

And remember the word as in the case of core  benefits the word was purpose and here the

words are that at least this should be there  in the product. So, carrying forward the same

example when you buy an airlines ticket  to travel from this place to that place

at least the airlines must provide a hassle-free  travel without any delay in travel time.

Expecting precision in time! Is it not basic we  talk about that and let us see what we find next?

So, then comes in expected product. The marketer prepares an expected product

wherein a set of attributes and conditions buyers  normally expect when they purchase the product.

Expected product modifies the basic product  or takes it towards a further kind of a stage

wherein at least it moves towards an  expression that this I expect actually.

And the greater a company meets the expected  product level the better sustainable is

the brand of a company. Now, in developing and emerging markets

competition takes place mostly at this level  wherein, marketers try to meet the expectations

of the buyers. Again, the same  example the same very airlines you are

looking at provides a few benefits such as  comfortable waiting area, prompt inflight service,

clean washrooms and punctuality of the flight  which meets the expectation of the customer

as always. So, living up to the  expectations of the customer.

Then comes in augmented product. Now, again it  is beyond my expectation wherein I feel happy

about the product and this is the statement. So,  this expression is changing from at least to what

I expect to what it should be . Now, it is the  desire of the customer that the marketer converts

into reality with a suitable cost alignment or a  price alignment with as far as augmented products.

Many a times marketers in tough competition era  go for augmented product without any additional

cost or price to the customer. Now, it is an  expression when you say cost to the customer

but it is usually the price to the customer. Now  the marketer prepares an augmented product that

exceeds customer expectations, differentiation  arises and competition increasingly

occurs on the basis of the product augmentation. A customer can reject a tangible product if they

do not get expected services along in terms  of beyond expectation and we have already

talked about expected products. So, you see  a marketer deciding to augment his product

should be aware of the total consumption  system of buyers that is identifying the

way the user performs the tasks of getting,  using, fixing and disposing of the product.

Augmented benefits soon become expected  benefits also because customer gets used to that

Because as marketers are pulling up the benchmark  the customers are getting used to those and that

is how augmentation in the product is actually  gelling up with the expectation of the customer.

So, for example, airlines is very precise always  in time, then it is no more an augmented feature,

it has become an expected feature. And that  is what they are marketing, that, we are

usually in time or when you say that we are  always in time that is how the difference

comes in when you raise the expectation  level of your customers. So, augmentation

can also be in the form of product, warranty,  installation free delivery, refund, updates,

product trades and free samples and so on. And the same example of an airlines which

we were talking of may provide augmented  benefits such as free meals, window seat,

internet, in-flight entertainment and priority  in security checking and boarding and so on.

And several kinds of other features and moreover  nowadays many airlines as augmented element of

the product are using best of the terminals  also. So, that is again a very important part.

Then comes in potential product. See it encompasses all the possible

augmentations and transformations the product  or offering might undergo in the future. Here,

I have referred to an important offering  which I would be talking in terms of

product management later on as well but just  to give you a glimpse that offering is largely

which can be seen with reference to product,  price, place and promotion cumulatively.

Whatever is offered in the form of a  product is accompanied with a price and

the place where you will find the product, the  message associated with the product and therefore

offering is a bundle. So, that is where when  you say product or offering. And here you

must get to terms with that product must be  seen with reference to offering later on.

Because, when we will be talking about product  planning, we will be focusing upon the product

elements but when we will be talking about market  planning, we will be looking into product as

offering, a bundle basically. So, then  here companies search for new ways to

satisfy customers and distinguish  their offering or product actually.

And it is a promise that is  attached to the product over time.

And here you will find that we using product  and offering interchangeably. But, remember

offering is a wider term with  context of product being a bundle

wherein you cannot separate that from its  price and distribution or place and message.

Promise can be in the form of financial  and aspirational perspective also and the

same airlines for example can add potential in  their offerings through free pickup and drop

of customers from their places and provide hotel  accommodation during long waiting transit hours.

For example, 4-5 hours they have lounges, they  have hotels, associated hotels in the nearby areas

wherein they can give you a free place or free  room to stay by and porter facilities and so on.

So, I will be focusing upon the other aspects  of the complete scenario associated with these

five elements just to add some aspect  of understanding when we talk of

a transition from the core  benefit to a potential product.

Here there is one interesting aspect which one  must notice because we started our discussion from

a product manager s responsibility  as explained by professor Lehmann, we

must realize one thing that what is the desire  of a product manager about his products.

You see the ultimate desire of a product  manager can be seen with two perspectives. One

larger number of people use my product

and it reaches to so many people for example  you design a management program as a product

and although I refrain from looking at students  as customers but then still you look at management

program as a product. So, your desire is to reach  to the largest levels of audience that is one

and second is that a product manager would think  in terms of taking it higher and higher in terms

of perceived quality, satisfaction, loyalty it  may gain and you may think in terms of adding

so many things to it, which definitely would  somehow put up a cost element to you and then you

will find that you can differentiate the product  with reference to the cost you are incurring and

you may have two kinds of or three kinds of people  for similar kind of a product paying you different

kinds of prices. So, wherein you would be charging  premium for the augmentation you would introduce

to the product and you would be charging  probably lesser premium for expected product

or you might not charge any premium for that. And core benefit product is related to every

buyer one can think of. Does it ring any bell  in your mind? Have you recently gone for trying

to purchase an automotive for example and they  have suggested you that this is the base model

then this is the next stage of the model  and this is the premium model and have

they categorized that in front of you? and  that is precisely we are talking about.

So, within one model you will find this kind of a  differentiation and if you will look at that with

the perspective of a product line wherein you  are addressing larger volumes of customers then

it is more interesting. And one last thing  in this relation to what we are talking about

is that probably your journey as a product  manager starting from base product or basic

product to expected to augmented product and to  potential product will enable you to change the

market for yourself completely. That is you introduced the product for

a larger audience and you kept on reducing the  size of the market for yourself or number of

customers for yourself and kept on reaching to  a stage wherein you converted that particular

product into a very high premium product earning  larger margins from a limited number of customers.

That can also be done. How is it done?  The same methodology, the same story. So,

keep thinking about this I will join you next time  with lots of other insights till then good bye.