Unit 8: Product Management PDF

Unit 8 Product Management Unit 8: Product Management “A great product manager has the brain of an engineer, the heart of a designer, and the speech of a diplomat.” - Dipchand Nishar, Former VP of Product and User Experience LinkedIn...

Unit 8 Product Management Unit 8: Product Management “A great product manager has the brain of an engineer, the heart of a designer, and the speech of a diplomat.” - Dipchand Nishar, Former VP of Product and User Experience LinkedIn Market-Based Management Copyright 2022  Tesla’s Product Line Strategy How did Tesla, a relatively new market entrant, create so much value for its customers and shareholders? Market-Based Management Copyright 2022 Unit 8 - Content 1. Product Management: Introduction 2. Product Portfolio Decisions: Horizontal and Vertical Product Differentiation 3. Product Line Management and Product Line Extensions 4. New Product Launch Process 5. Conclusion  Unit 8 1.Product Management: Introduction  Samsung: What is a product? TV & Projectors Telephony Appliances Computers & Monitors Accessories The term product has many meanings What we see on the shelves of a store, the individual products that we put in our shopping cart and that embody all the characteristics on a tangible level, are the so-called articles or references.  Samsung: The product New portfolio Product or global offering Launch Process Product Range Portfolio The product portfolio is given by the total number of references offered by a company to the market, that is, its global offer. The product portfolio in turn can be divided into several subgroups of products that will form the different LINES REFERENCES ranges/lines. Toyota and Lexus Product Line Positioning Market-Based Management Copyright 2022  Lexus Product Positioning Product Quality Relationship Quality Reliability, durability, defect- Loyalty and rewards free performance, features, programs, reminding options, and ongoing Service Quality customers of service improvements. Ease to maintain the vehicle appointments, encouraging through dealership service them to provide feedback, visits, repairs, and other and consistently listening to support actions. them. Market-Based Management Copyright 2022 Prioritizing Product Features Based on Customer Needs “Any damn fool can make something complex; it takes a genius to make something simple”. – Pete Seeger, Product Director at Docusign “People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas”. – Steve Jobs., Founder CEO of Apple Inc. Market-Based Management Copyright 2022  The GE Lullaby Warmer in India When does it make sense to simplify a product instead of adding features and attributes? What would have happened if GE did not simplify the product in India? Market-Based Management Copyright 2022  Unit 8 2. Product Portfolio Decisions: Horizontal and Vertical Product Differentiation Market-Based Management Copyright 2022 Horizontal and Vertical Product Differentiation What do companies gain by differentiating their products horizontally and/or vertically? How do companies avoid falling in the “Engineering Trap”? Market-Based Management Copyright 2022 Frito-Lay Horizontal and Vertical Product Extensions Market-Based Management Copyright 2022 Competitive Advantage Through Product Differentiation Market-Based Management Copyright 2022  Improving Existing Features Which improvements in existing features of your smartphone have given you the greatest value? Why? Are there feature improvements in your smartphone that you don’t value? Why? Market-Based Management Copyright 2022 Adding New Features Market-Based Management Copyright 2022  Appearance: Amazon V s When Amazon customers receive an in-home delivery, the box’s condition and packaging quality reassure them that their merchandise is undamaged. Appearance goes beyond aesthetics and provides important information about Amazon’s reliable delivery system. Market-Based Management Copyright 2022 Individualized Attention “You can have any color you want, as long as it’s black” - Henry Ford Market-Based Management Copyright 2022  Creating Community Harley Davidson Lego Market-Based Management Copyright 2022  Unit 8 3. Product Line Management and Product Line Extensions Market-Based Management Copyright 2022  Colgate’s Product Line Breadth What are the benefits of increasing the Product Line Breadth? Is it the right decision for every company? What can happen when firms extend their lines without removing existing products? Market-Based Management Copyright 2022  Product Line Breadth and Length Product Line Length: Refers to the total Product Line Breadth: Refers to the number of specific products within a single number of different product lines a product line. company offers. If a company has a cleaning products line, For example, a company might have the length would be the number of several product lines such as cleaning different types of cleaning products in that products, food items, and personal care line, such as soaps, detergents, products. disinfectants, etc. So, breadth is the variety of product categories, while length is the number of individual products within each category or product line  Product Line Length Amplitude: number of products that make up the line. Length Depth: number of references offered for each product.  Optimal product line length Decisions to remove existing products SET OF PRODUCTS THAT DELIVER THE HIGHEST LEVEL OF GOAL SUCCESS New Product Launch Decisions  Unit 8 4. New Product Launch Process  New Product Launch Process Phases 1. Idea generation 2. Idea screening 3. Concept development and testing 4. Product development and testing Definition 5. Market testing of a Mk. Plan 6. Commercialization‐Launch 7. Economic and Financial viability 8. Launch implementation and control  New Product Launch Process New Product Development Process (Cooper) Source: Kotler and Keller (2016)  New Product Launch Process Phases 1: Generation Sources External: customers, competitors, expert opinions, suppliers, intermediaries, research agencies, keywords search to scan trade publications. Internal: R&D departments, employees…  NewofProduct 3. The process Launch launching new products Process on the market. Phases 1: Generation Brainstorming Between 6-10 people. 1 hour session. Problem stated as presented in reality. Ask for solutions. Some rules: State or present the subject in general terms, but well defined. Circular connection. Say everything that comes to your mind. Speak your mind. Cross fertilization. Connect ideas. Don’t be judgmental. Respect ideas. Don’t evaluate ideas. If done correctly, group brainstorming sessions can create insights, ideas and solutions.  New Product Launch Process Phases 1: Generation Elementary Based on product characteristics and looking for possible changes and improvements. Methodology: establish a list of the product’s main characteristics and modify it trying to find a better combination to improve it. Are there other ways to use the product? If we modify it, will there be other uses? What can we add? What can we eliminate?  New Product Launch Process Phases 1: Generation Morphological matrix (discovery matrix) Combinatorial analysis to try to discover not previously observed relations that could provide new ideas. Methodology: Choose a list of variables to use. One of them from the company and another one from the market. Systematic development of associations that we discover in every cell.  New Product Launch Process Phases 1: Generation Morphological matrix. Example-Thermometer Who Men Women Children Blind ? How people Remember where it is Check if temperature is lower Clean Place and keep it some time Enough time? Read temperature  New Product Launch Process Phases 1: Generation  SCAMPER was first introduced by Bob Eberle to address targeted questions that help solve problems or ignite creativity during brainstorming meetings.  The name SCAMPER is acronym for seven techniques; (S) substitute, (C) combine, (A) adapt, (M) modify, (P) put to another use, (E) eliminate and (R) reverse.  These keywords represent the necessary questions addressed during the creative thinking process.  New Product Launch Process Phases 1: Generation Activities to learn Organize in 6 groups Each group must develop a SCAMPER method for an existing product One person from the group will present to the rest of the class.  New Product Launch Process Phases 2: Idea screening Objective Reduce the number of ideas generated. Formed by compatible ideas: mission, objectives, internal characteristics of the company. Formed by ideas with market perspective. Methodology Compatibility with market and set objectives. Available technology and productive capacity. Competition. Possibilities to make marketing effort.  New Product Launch Process Phases 3: Concept development and testing Idea Concept Description of a A description of physical possible product and perceptual in functional characteristics of the terms. A product potential product and idea can be the promise that it turned into represents for a specific several concepts. group of customers. Functions and benefits, group of customers and technology to be used.  New Product Launch Process Phases 3: Concept development and testing Example: concept development based on an idea Imagine that a large food-processing company gets the Idea idea of producing a powder to add to milk to increase its nutritional value and taste. Concept An instant drink for adults who want a quick 1 nutritious breakfast without preparation. Concepts Concept A tasty snack for children to drink as a 2 midday refreshment. Concept A health supplement for older adults to drink in 3 the late evening before bed.  New Product Launch Process Phases 3: Concept development and testing Concept testing Objective Determine what consumers perceive as the most important attributes for this new concept. Methodology Presenting the product concept to target consumers (20- 200 people) physically or symbolically, and getting their reactions: level of acceptance, credibility, purchase interest, etc.  New Product Launch Process Phases 3: Concept development and testing The Five Things the Concept Should Have 1. Customer Insight/Target 2. Product Description 3. Solution to the Problem (Benefit) 4. Proof that the product or brand solves the problem (Reason to believe) 5. How is the product unique?  New Product Launch Process Phases 3: Concept development and testing How to write the concept?  Use Simple Words  Maximum 130 words  Concepts Must Prove to Be Different  It should be communicated clearly and concisely  Avoid professional jargon  You need to let them know if it's a new product, a line extension, etc.  Try using words: "The best," "improved," etc.  New Product Launch Process Phases 3: Concept development and testing Example: Solution from Insight Insight 1 "Milk is good for you, but it's also fattening" Solution SKIM MILK Concept You can enjoy milk with all the nutrients but without the fat  New Product Launch Process Phases 3: Concept development and testing Example: Concept testing Insight "I enjoy a nutritious breakfast, but I don't have time" An instant drink for adults who want a quick nutritious breakfast Concept without preparation. Our product is a powdered mixture added to milk to make an instant breakfast that gives all the daily nutritional Concept testing requirements along with good taste and high convenience. The product comes in three flavors (chocolate, vanilla, and strawberry) and individual packets, six to a box, at €2.49 a box.  New Product Launch Process Phases 3: Concept development and testing Concept testing: questions to consider 1. Communicability and believability: “Are the benefits clear and believable to you?”. If the scores are low, the concept must be refined or revised. 2. Need level: “Do you see this product solving a problem or fulfilling a need for you?”. 3. Gap level: “Do other products currently meet this need and satisfy you?”. 4. Perceived value: “Is it good value for money?”. 5. Purchase intention: “Would you (definitely, probably, probably not, definitely not) buy the product?”. 6. User targets, purchase occasions, purchasing frequency: “Who would use this product, when, and how often?” Activities to learn Organize in 6 groups Each group must think about an insight, then you must develop the corresponding concept testing for this insight One person from the group will present to the rest of the class.  New Product Launch Process Phases 3: Concept development and testing Prototype A prototype allows for the theory to be put into practice, and it can be a graphic representation, a functioning mockup or a minimum viable product. A prototype is an example, model or early launching of the product or service to validate: The development of the product or service The processes The users’ interaction  New Product Launch Process Phases 3: Concept development and testing Prototype The development of prototypes consists of generating a tangible proposal to present potential clients or experts with the goal of validating the idea, its potential approval or modification. The utility of the prototype consists of: Get a look at the users’ first reactions Receive feedback from users or experts Iterate and modify the idea. Go from the theorical to the practice.  New Product Launch Process Phases 3: Concept development and testing Prototype Test The steps to follow when doing a prototype test are: 1. Presenting the prototype to the client. 2. Explaining its uses and purposes. 3. Technological habilitation. 4. Client’s interaction 5. Testing the solution 6. Client’s observation 7. Client’s feed-back  New Product Launch Process Phases 4: Product development and testing Product development It is the transformation of product concepts that look successful into a technical and economically viable reality (a prototype). Types Functional: to make sure that the product performs safely and provides functions effectively (mechanical testing, operation tests, etc.).  Potential consumers: similar to concept test but more specific and reliable. For example: consumer’s general reactions, perceived advantages and disadvantages, uses, important attributes, price that the consumers are willing to pay, preferred place to buy, etc.  New Product Launch Process Phases 5: Market testing Market testing Make the product available to potential consumers and in quasi real market conditions to check their reactions. Some types of market testing for non-durable consumer goods: Conventional Minimarket Laboratory market test test test Virtually  New Product Launch Process Phases 5: Market testing The product is launched in one or several representative areas of the total market with a strategy as similar as possible to the future launch. Convention Cities? Between 2-6. Depends on the homogeneity of the al market cities test and the marketing strategies. What cities? The most representative of the total market. Time: between 2-18 months. Provide repurchase opportunity to the consumer. More time implies more reliability but it’s more expensive.  New Product Launch Process Phases 5: Market testing The product is sold in a specific number Minimarket of retailers (retailers panel) test that collaborate with the manufacturers. Allows control of the situation in shelves, shop windows, promotion in the point of sale, prices, according to plans. Requires less time and cost.  New Product Launch Process Phases 5: Market testing The product is sold in a specific number of Minimarket retailers (retailers panel) test that collaborate with the manufacturers. Allows control of the situation in shelves, shop windows, promotion in the point of sale, prices, according to plans. Requires less time and cost.  New Product Launch Process Phases 5: Market testing Choose a pilot list of consumers that must be as representative as possible of the total market. Laboratory test Methodology: consumers are shown some commercials including one of the product. After that we take them to a shop and give them some money to spend. This store acts like a laboratory. When the visit finishes consumers are interviewed about the reason why they bought the product or not.  New Product Launch Process Phases 6: Commercialization-Launch Key questions in launch plan Who? When? Where? (target) How? How much? (marketing (budget) plan)  New Product Launch Process Phases 7: Economic and Financial viability Necessary information  Investment required in field, buildings, equipment, machines, etc. (units and volume).  Personnel necessary (staff and budget).  Unit variable cost of production.  Unit variable cost of commercialization.  Sales forecast for several periods.  Annual promotion budget.  New Product Launch Process Phases 8: Launch implementation and control Keywords: coordination and timing If the flow of goods (distribution) is much By contrast, if the faster than the information flow is information flow faster, the result is the (advertising) the result is frustration of the retail frustration (stock potential consumer accumulation)