Product Management - Unit 8

**Unit 8: Product Management** **Introduction** Product management plays a vital role in a company\'s strategy. A product manager combines the analytical mindset of an engineer, the creativity of a designer, and the communication skills of a diplomat. A key example is Tesla, which leveraged innova...

**Unit 8: Product Management** **Introduction** Product management plays a vital role in a company\'s strategy. A product manager combines the analytical mindset of an engineer, the creativity of a designer, and the communication skills of a diplomat. A key example is Tesla, which leveraged innovation to create significant value for customers and shareholders through strategic product management. A \"product\" refers to items we see in stores and purchase, embodying characteristics that meet tangible needs. Samsung's product portfolio demonstrates this concept, including TVs, projectors, telephony devices, and accessories. The entire range forms the company's global offering, divided into specific product lines and ranges. The portfolio structure aids in segmenting and targeting diverse markets. **Product Portfolio Decisions: Horizontal and Vertical Differentiation** Product differentiation allows companies to tailor offerings to specific customer needs and gain a competitive advantage. Horizontal differentiation involves variations in features like flavor, color, or design (e.g., Frito-Lay's chips with different tastes), while vertical differentiation focuses on quality and price levels. For instance, Toyota and Lexus exemplify vertical differentiation. Toyota focuses on reliability and affordability, while Lexus emphasizes luxury and performance. Companies must balance feature improvements to maximize customer value without complicating products unnecessarily, avoiding the \"Engineering Trap\" where excessive complexity diminishes user experience. **Product Line Management and Extensions** Product line management involves expanding the breadth and length of a company's offerings. Breadth refers to the number of product categories (e.g., Colgate offering oral care, personal hygiene, and cleaning products), while length refers to the number of items within a category (e.g., different types of toothpaste). Expanding a product line can boost market coverage, but adding too many products without strategic removal can lead to inefficiency and customer confusion. Companies must determine the optimal product line length to achieve their goals, balancing variety with operational effectiveness. **New Product Launch Process** Launching a new product involves a structured process with eight phases: 1. **Idea Generation**: Ideas can come from internal sources (R&D teams, employees) or external sources (customers, competitors, suppliers). Techniques like brainstorming and the SCAMPER method (Substitute, Combine, Adapt, Modify, Put to another use, Eliminate, Reverse) help spark creativity. 2. **Idea Screening**: This phase filters ideas based on compatibility with market needs, company objectives, technology feasibility, and potential competition. The goal is to focus resources on the most promising concepts. 3. **Concept Development and Testing**: A product idea is turned into a concept with physical and perceptual attributes, tested with target customers. Testing ensures the concept resonates with users, solving their needs effectively. For example, a powdered drink concept could target different audiences like children, adults, or seniors. 4. **Product Development and Testing**: Successful concepts are transformed into prototypes. Functional testing ensures safety and performance, while consumer testing assesses attributes like usability, price sensitivity, and purchase intent. 5. **Market Testing**: Products are tested under quasi-real market conditions. Conventional market tests occur in representative cities, while minimarket and laboratory tests simulate retail environments to gauge customer reactions. 6. **Commercialization**: Key decisions include determining when, where, and how to launch the product, along with budget allocation. Effective coordination ensures smooth execution. 7. **Economic and Financial Viability**: This phase involves calculating investments, variable costs, and sales forecasts to ensure profitability. 8. **Implementation and Control**: Coordination and timing are critical. Synchronizing product availability with advertising and demand avoids stock issues and maximizes customer satisfaction. **Conclusion** Effective product management requires understanding customer needs, differentiating products, and executing well-planned launches. Companies must balance innovation and simplicity, ensuring that each step in the product management process contributes to delivering value to customers while achieving business objectives.