MBA – 202 MARKETING MANAGEMENT UNIT – 3

MBA – 202

                                      Marketing Management

Unit – 3

Q1.  Define Product Mix? What are the different product decisions taken by a product manager?

Ans. Product mix, also known as product assortment, refers to the total number of product lines that a company offers to its customers.

For example, a small company may sell multiple lines of products. Sometimes, these product lines are fairly similar, such as dish washing liquid and bar soap, which are used for cleaning and use similar technologies. Other times, the product lines are vastly different, such as diapers and razors. The four dimensions to a company’s product mix include width, length, depth and consistency

Width :- The width of a company’s product mix pertains to the number of product lines that a company sells. For example, if a company has two product lines, its product mix width is two. Small and upstart businesses will usually not have a wide product mix. It is more practical to start with some basic products and build market share. Later on, a company’s technology may allow the company to diversify into other industries and build the width of the product mix.

Length :- Product mix length pertains to the number of total products of items in a company’s product mix, according to Philip Kotler “ marketing management : analysis, planning, implementation and control.” For example, ABC company may have two product lines and five brands with each product line. Thus, ABC’s product mix length would be ten. Companies that have multiple product lines will sometime keep track of their average length per product line. In the above case, the average length of an ABC company’s product line is five.

Depth :- Depth of a product mix pertains to the total number of variations for each product. Variations can include size, flavor and any other distinguishing characteristics. For example, if a company sells three sizes and two flavors of toothpaste, that particular brand of toothpaste has a depth of six. Just like length, companies sometimes report the average depth of their product lines, or the depth of a specific product line.

Consistency :- Product mix consistency pertains to how closely related product lines are to one another – in terms of use , production and distribution. A company’s product mix may be consistent in distribution but vastly different in use. For example, a small company may sell its health bars and health magazine in retail stores. However, one product is edible and the other is not. The production consistency of these products would vary as well.

Different product decisions taken by a product manager :

The Product Manager (PM) is responsible for the strategy, roadmap, and feature definition of a product and product line. The role invloves working with cross-functional teams and may include marketing, forecasting, and profit and loss (P&L) responsibilities. A PM analyzes the market and competitive environment to define a differentiated product vision that delivers unique value. This role spans many types of activities, from strategic to tactical. A Product Manager provides cross-functional leadership and bridges organizational gaps between different functional groups , most often between engineering, marketing, sales and support.

Q2. What is New Product? What is the necessity of developing a new product? Explain the process of new product development? Why do new product fails?

Ans. New product : Any offer which is different from the existing one. A new product is manufactured to meet the tastes and preferences of the customers which are changed as the passage of time and to retain the existing customers to be inerested in the company’s product so company’s time to time provide new products to their customers.

Businesses focus on designing the new products and selling these products to customers. The company’s goal with creating new products involves two parts. The first part consists of finding a product that customers purchase produce revenue for the business. The second part consists of beating competitors to market. The first company to offer a product generates the greatest number of repeat customers.

The necessity of developing new product :

New product become necessary for meeting the changes in consumer demands :- Innovation is the essence of all growth. This is especially true in marketing. In an age of scientific and technological advancements, change is a natural outcome – change in food habits, change in social customs, change in expectations and requirements. Any business has to be vigilant to these changes taking place in its environment. People always seek better products, great convenience, newer fashion, and more value for money. A business firm has to respond to these dynamic requirements of its clientele and these responses take the shape of new products and new services. Through such a response, the firm reapsa good deal of benefits.

New product become necessary for making new profits :- New product become necessary from the profit angle too. Products that are already established, often have their limitations in enhancing the profit level of the firm. We sees how profits from products decline as they reach the maturity stage of their life cycle and how the profits vanish, as they glide into the stage of decline. It thus becomes essential for business firms to bring in new products to replace old, declining and losing products. New products become part and parcel of the growth requirements of the firm and in many cases, new profits come to the firm only through new products.

New products become necessary for combating environmental threats :- The need for responding to changes and the need for new profits are not the only factors that persuade business firms to go for new products. There is more compelled need – the need to combat the threats arising from the environment. In fact, on the environment front a firm has to combat economic, social, legal, political and technological threats. These threats make some of their current products highly vulnerable. And to reduce the vulnerability of their business as a whole, they seek out new products. Thus for many firms, new product development becomes an avoidable combat against environmental threats.

Process of New Product Development :

The process of  New Product Development consists of certain stages. Each of these stages invloves considerable study and analysis at each stage and these stages are as following :

1.      Idea Generation :- the first stage in the process is to generate the idea. And the idea can be generated through brain storming, listing attributes, marphological changes (change in size, packaging, weight, etc.) and forced relationship. New product ideas can also come from market research studies. Research studies on the consumers, products, competition, etc. will reveal market gaps by comparing the existing supply of products with the ideal product conceptions of consumers. But all market gaps cannot lead to commercially viable products. The promising ideas will have to be chosen for framing new products concepts.

2.      Idea Screening :- Normally, a new product oriented organization will have at any time several new product ideas with them. The problem lies in identifying which one are promising ideas. In this stage, the various product ideas are put to rigorous screening by expert product evaluation committees. They seek answers to basic questions, like :

   Is there a felt need for the new product?

   Is it an improvement over an existing product?

   Is it close to our current line of business?

   Or does it take us to a totally new line of business?

   Can the existing marketing organization handle the product?

   Or does it need extra expertise on the production and marketing front?

The more attractive looking ideas pass on to the next stage.

3.      Concept development and testing :- In this stage, they seek how to produce those ideas which they adopted in the previous stage. Then they develops concepts for them. They test those ideas by asking the marketers who are experts in marketing. They graphically design those ideas first to check how their new product will look in reality.

Virtual form of ideas are developed here.

4.      Marketing Strategy Development :-    Plans related with the market is marketing strategy. Here companies seek :

    who will be their target in market? (which income group will be targeted)

    When and where to position the product?

    What will be the profit goals?

    What will be the product’s price?

    How this/these product/s will be distributed?

    What will be the budget for promotion?

5.      Business Analysis :- In this stage, companies estimates how much expenses will be incurred in producing this/these product/s. Companies estimates the total cost to be incurred in manufacturing the product, total sales (estimates) And also estimates how much profit can be earned by selling this/these product/s. These estimations are made with the help of research & development, financial analysis and the time to achieve the break even point.

6.      Commercialization :- At this stage the company takes the decision to go in for large scale manufacturing and marketing of the product. It passes on to this stage only when the results of all the previous steps are found favourable. It is at this stage that the company commits itself to fully commercialise the new product idea through investment in manufacturing and marketing. The various marketing strategies are employed by the company at thi stage when it resorts to commercialization of a new product idea. Today, quiet a few progressive firms operate separate new product departments and new product committees to take care of new product development.

New Product Failure :\

New product development is highly expensive, time consuming and risk laden affair. Only those organisations who have the capacity to absorb the shocks arising out of all these factors, can really go ahead with the task of new product development. Such organisations invest heavily in research and development and they often have several new product ideas in the queue, each in different stages of formulation. While such firms remain leaders in their chosen markets, with all the attendent advantages of being a leader, the vast majority of the companies prefer to be followers entering with similar products after the pioneer establishes his new product. Majority of the firms shy away from the task of new product development for the following reasons :

-          New product suffers from a high attrition rate. Many new product ideas, after years of caring, do not reach the market at all. Considerable time, money and effort is thus wasted.

-          New product suffer from a high rate of market failure. That means that even those product which reach the market after years of preparation and work, often fall misersably in the market.

-          Even in the case of successful new products, success is short lived. Many of them suddenly die out after the initial boom.

Q3. What do you mean by Product Life Cycle ? Explain its different stages with suitable diagram?

Ans.  PLC : A product passes through certain distinct stages during its life. This cycle of stages is called the Product Life Cycle (PLC). The PLC is normally presented as a sales curve spanning the product’s course from introduction to decline, as shown in the figure given below. The utlility of the PLC concept lies in the fact that each stage in the product life cycle is characterised by a typical market behaviour and consequently each stage lends itself to the application of a certain specific marketing strategy. Understanding the PLC concept managing its effectively can help prolong the profitable phases of the life span of the product.

It is the path/course through which a product gets its sales and profit in its life.

It is the path through which a product passes in its whole life.

It is the sales/profit graph of a product.

There are four stages in PLC, these are :

 1. Introduction stage, 2. Growth stage, 3. Maturity stage and 4. Decline stage

                             

·        No certainity

·        It is no easy to recognize on which stage the product is

·        No certain period of stages

·        We can only forecast when the product will start facing further new stage

Characteristics	Introduction	Growth	Maturity	Decline
Sales	Low sales	Rapidly rising sales	Peak sales	Declining sales
Costs	High cost per customer	Average cost per customer	Low cost per customer	Low cost per customer
profits	Negative	Rising profits	High profit	Declining
Customers	Innovators	Early adopters	Later majority	Laggards
Competitors	Few/no/ negligible	growing	Stable number	Decline
Marketing Objectives	Create product awareness and try	Maximize market share	Maximize profit while defending market share	Reduced expenditure and milk the brand
Marketing Mix	Basic product offered	Offer product extension, service, warranty	Diversify brands and models	Phase out waste products
Price	Cost + pricing	Price to penetrate market	Price to match the best competitors	Cut price
Place/ distribution	Selective distribution	intensive	More intensive	Go selective and phase out unprofitable outlets
Advertisement	Product awareness	To build awareness and persuasive in the mass market	For brand differentiation and benefits sought	Reduced level of advertisement to retain loyal customers
Sales promotion	Heavy sales promotion	Reduce to take advantage of heavy consumer demand	Increase to encourage brand switching and to defend own brand	Reduce to  minimum level

Q4. Explain the different strategies adopted by a marketer to increase the sales of its product in different stages of Product Life Cycle?

Ans. Product passes through four stages of its life cycle. Every stage poses different opportunities and challenges to the marketer. Each of stages demands the unique or distinguished set of marketing strategies. A marketer should watch on its sales and market situations to identify the stage in which the product is passing through, and accordingly, he should design appropriate marketing strategies. Here, strategy basically involves four elements – product, price, promotion and distribution.

By appropriate combination of these four elements, the strategy can be formulated for each stages of the PLC. Every stage gives varying importance to these elements of marketing mix. Let us analyze basic strategies used in each of the stages of the PLC, as described by Philip Kotler.

Marketing strategies for Introduction Stage :

Introduction stage is marked with slow growth in sales and a very little or no profit. Note that product has been newly introduced, and a sales volume is limited; product and distribution are not given more emphasis. Basic constituents of marketing strategies for the stage include price and promotion. Price, promotion or both may be kept high or low depending upon market situation and management approach.

Following are the possible strategies during the first stage :

                                                                  promotion

                                            high                                                         low     

Rapid skimming strategy	Slow skimming strategy
Rapid penetration strategy	Slow penetration strategy

high

low
 1.Rapid skimming strategy :- this strategy consists of  introducing a new product at high price and high promotional expenses. The purpose of high price is to recover profit per unit as much as possible. The high promotional expenses are aimed at convincing the market the product merits even at a high price. High promotion accelerates the rate of market penetration, in all; the strategy is preferred to skim the cream (high profits) from market.

This strategy makes a sense in following assumptions :

a.       Major part of the market is not aware of the product.

b.      Customers are ready to pay the asking price.

c.       The possibility of competition and the firm wants to build up the brand preference.

d.      Market is limited in size.

2.Slow skimming strategy :- this strategy involves launching a product at a high price and low promotion. The purpose of high [price is to recover as much as gross profit as possible. And, low promotion keep marketing expenses low. This combination enables to skim the maximum profit from the market.

            This strategy can be used under following assumptions :

a.       Market is limited in size.

b.      Most of consumers are aware of product.

c.       Consumers are ready to pay high price.

d.      There is less possibility of competition.

3.Rapid penetration :- the strategy consists of launching a product at a low price and high promotion. The purpose is the faster market penetration to get larger market share. Marketer tries to expand market by increasing the number of buyers.

            It is based on following assumptions :

a.       Market is large

b.      Most buyers are price-sensitive. They prefer the low-priced products.

c.       There is strong potential for competition.

d.      Market is much aware of the product. They need to be informed and convinced.

e.        Per unit cost can be reduced due to more production, and possibly more profits  at low price.

4.Slow penetration :- the strategy consists of introducing a product with low price and low level promotion. Low price will encourage product acceptance, and low promotion can help realization of  more profits, even at low price.

            Assumptions of this strategy :

a.       Market is large.

b.      Market is aware of the product.

c.       Possibility of competition is low.

d.      Buyers are price sensitive or price elastic, and not promotion elastic.

Marketing strategies for growth stage :

This is the stage of rapid market acceptance. The strategies are aimed at sustaining market growth as long as possible. Here, the aim is not to increase awareness, but to get trial of the product. Company tries to enter the new segments. Competitors have entered the market. The company tries to strengthen competitive position in the market. It may forgo maximum current profits to earn still greater profits in the future.

            Several possible strategies for the stage are as under :

a.       Product qualities and features improvement.

b.      Adding new models and improving styling.

c.       Entering new market segments.

d.      Designing, improving and widening distribution network.

e.       Shifting advertising and other promotional efforts from increasing product awareness to product conviction.

f.       Reducing price at the right time to attract price sensitive consumers.

g.      Preventing competitors to enter the market by low price and high promotional efforts.

Marketing strategies for Maturity stage :

In this stage, competitors have entered the market . there is severe fight among them for more market share. The company adopts offensive/aggressive marketing strategies to defeat the competitors.

            Following possible strategies are followed :

1.      To do nothing :- to do nothing can be an effective marketing strategy in the maturity stage. New strategies are not formulated. Company believes it is advisable to do nothing. Earlier or later, the decline in the sales is certain. Marketer tries to conserve money, which can be later on invested in new profitable products. It continues only routine efforts and starts planning for new products.

2.      Market modification :- this strategy is aimed at increasing sales by raising the number of brand users  and the usage rate per user. Sales volume is the product (or outcome) of number of users and usage rate per users. So, sales can be increased either by increasing the number of users or by increasing the usage rate per user or by both. Number of users can be increased by variety of ways.

Marketing strategies for Decline stage :

Company formulates various strategies to manage the decline stage. The first important task is to detect the poor products.

 After detecting the poor products, a company should decide whether poor products should be dropped. Some companies formulate a special committee for the task known as product review committee. The committee collects data from internal and external sources and evaluates products. On the basis the report submitted by the committee, suitable decisions are taken.

            Company may follow any of the following strategies :

1.      Continue with the original products :

This strategy is followed with the expectations that competitors will leave the market. Selling and promotional costs are reduced. Many times, a company continues its products only in effective segments and from remaining segments they are dropped. Such products are continued as long as they are profitable.

2.      Continue products with improvements :

Qualities and features are improved to accelerate sales. Products undergo minor changes to attract buyers.

3.      Drop the product :

When it is not possible to continue the products either in original form or with improvement, the company finally decides to drop the products.

Products may be dropped in following ways :

a.       Sell the production and sales to other companies.

b.      Stop production gradually to divert resources to other products.

c.       Drop products immediately.

Q5. Define Brand. Explain different Branding strategies?

Ans. Brand : unique design, sign, symbol, words or a combination of these, employed in creating an image that identifies a product and differentiates it from its competitors. Over time, this image becomes associated with a level of credibility, quality and satisfaction in the consumer’s mind. Thus brand helps harried consumers in crowded and complex market place, by standing for certain benefits and value. Legal name for a brand is trademark and, when it identifies or represents a firm, it is called a brand name.

A type of product manufactured by a particular company under a particular name.

Different branding strategies :

I classify them on the basis of the strategy that has been instrumental in their creation and management. The broad brand management strategies that I used to classify are as follows :

1.      The Product Brand Strategy :

This strategy involves the assignment of a particular name to one and only one product as well as one exclusive positioning.

2.       The Line Brand Strategy :

In this strategy the line responds to the concern of offering one coherent product under a single name by proposing many complimentary products.

3.      The Range Brand Strategy :

Range brands bestow a single brand name and promote through a single promise a range of products belonging to the same area of performance.

4.      Umbrella Brand Strategy :

The same brand supports several products in different markets. Each of them has its own advertising tools and develops its own communications.

5.      Source Brand Strategy :

This is identical to umbrella branding strategy except for one key point the products are now named directly. Within the source brand strategy that family spirit dominates even if the offspring all have their own individual names.

6.      Endorsing Brand Strategy :

The endorsing brand gives its approval to a wide diversity of products grouped under product brands, line brands or range brand.

Q6.  What is Packaging? Explain the objectives of packaging ?  state the new trends, new innovation emerging in industry?

Ans. Packaging : it is the technology of enclosing or protecting products for distribution, storage, sale and use. Packaging also refers to the process of designing, evaluating and producing packages. Packaging can be described as a coordination system of preparing goods for transport, warehousing, logistics, sale and end use. Packaging contains, protects, preserves, transports, informs and sells. In many countries it is fully integrated into government, business, institutional, industrial and personal use.

Objectives of Packaging :

a.       Physical protection : the objects in the package may require protection from, among other things, shock, vibration, compression, temperature, etc.

b.      Barrier protection : a barrier from oxygen, water vapor, dust, etc., is often required. Package permeability is a critical factor in design. Some packages contain desiccants or oxygen absorbers to help extend shelf life. Modified atmospheres or controlled atmospheres are also maintained in some food packages. Keeping the contents clean, fresh and safe for the intended shelf life is a primary function.

c.       Containment or Agglomeration : small objects are typically grouped together in one package for reason of efficiency. For example, a single box of 1000 pencils requires less physical handling than 1000 single pencils. Liquids, powders and flowables need containment.

d.      Information transmission : packages and labels communicate how to use, transport, recycle or dispose of the package or product. With pharmaceutical, food, medical and chemical peroducts. Some types of information are required by governments.

e.       Marketing : the packaging and labels can be used by marketers to encourage potential buyers to purchase the product. Package design has been an important and constantly evolving phenomenon for dozens of years. Marketing communications and graphic designs are applied to the surface of the package and the point of sale display.

f.       Security : packaging can play an important role in reducing the security risks of shipment. Packages can be made with improved tamper resistance to deter tampering and also can have tamper-evident features to help indicate tampering. Packages can be engineered to help reduce the risks of package pilferage: some package constructions are more resistant to pilferage and some have pilfer indicating seals. Packages may include authentication seals to help indicate that the package and contents are not counterfeit. Packages also can include anti-theft devices, such as dye-packs, RFID tags or electronic article surveillance tags, that can be activated or detected by devices at exit points and require specialized tools to deactivate. Using packaging in this way is a means of loss prevention.

g.      Convenience : packages can have features which add convenience in distribution, handling, display, sale, opening, reclosing, use and reuse.

h.      Portion control : single serving or single dosage packaging has a precise amount of contents to control usage. Bulk commodities (such as salt) can be divided into packages that are a more suitable size for individual households. It is also aids the control of inventory: selling sealed one liter bottles of milk, rather than  having people bring their own bottles to fill themselves.