INSTRUCTIONAL MATERIAL

COLLEGE OF BUSINESS ADMINISTRATION

DEPARTMENT OF MARKETING MANAGEMENT

COMPILED
BY
MARIA TERESA R. YUMANG
Faculty
First Semester AY2020-2021
 OVERVIEW

New product have always been of interest to both academics and practitioners, and
organized, college-level instruction of the subject of product management traces from its
historical discipline. Product Management subject had evolved and still evolving to
present. To date, the Product Development & Management Association, (PDMA) a known
global community of more than 3,500 professional members around the world whose
skills, expertise and experience power the most recognized and respected innovative
companies in the world. This service provider of the latest tools and technology is an
independent, not-for-profit, third-party certification body which skills are essential, highly
valued, and sought by businesses and universities. They are the leaders in driving product
management, development, innovation productivity in terms of efficiency, speed and
impact.

Over 300 colleges have courses on the subject of Product Management which will equip
students what the industry demands in academic excellence and comprehensive
knowledge provision in becoming a winning professional in the future.
 COURSE OUTCOMES

This Instructional Material is divided into four topics. They are (1) Product Concept, (2)
Product Decision (3) Developing Products and (4) Managing Products. At the beginning
of each topic is a detailed Learning Objectives to give students a nutshell of what to expect
to learn in the discussion of course materials. Also, some figures taken from other
resources are provided to have a figurative view of the concept being presented. The
figure provides the detailed information about what goes on in the discussion of the topic.

Topic 1 and 2 introduces basic concepts and relationships that must be understood to
make effective product decisions. This includes definition and discussion of how
customers view products, examination of concepts of product line and product mix, and
exploration of the stages of the product life cycle and the effect of each on marketing
strategies. Topic 3 and 4 analyzes a variety of dimensions regarding product
management, including line extensions and product modification, new product
development and product deletion. It involves examination of ways to improve an
organization’s product mix by discussing management of product through the effective line
extension and product modification. Also, comprehensive discussion of phases and
stages of new product development process which include generating and screening
ideas, developing new products and commercializing new products. Next is identification
at how companies differentiate their products in the marketplace through quality, design,
and support services, and the importance of product deletion. Lastly, the analysis of
organizational structures used to manage products.

Acknowledgment on all the resources used is listed on the Reference part to give proper
identification of the author/s and contributors for the compilation of this instructional
material.

Finally is the Grading System in which students will based the computation of their mid-
term and final grades in accordance to the formula used.
 TABLE OF CONTENTS

Overview
Course Outcomes

TOPIC 1 – Product Concept Learning Objectives

Introduction: What is product?
Product Anatomy
Classification of products
Product Line vs. Product Mix
Assessment/Activities

TOPIC 2 – Product Decision Learning Objectives

Product Life Cycle
Stages of Adoption Process
Success and Failure of Products
Assessment Activities

TOPIC 3 – Developing Products Learning Objectives

Product Line Extension
Product Modification
Developing New Products
New Product Development
The New-Product Development Process
Assessment/Activities

TOPIC 4 – Managing Product Learning Objectives

Product Differentiation though Quality, Design and Support Services
Product Positioning and Repositioning
Perceptual Mapping
Product Deletion
Product Manager Job Description
Assessment/Activities

References
Grading System
 TOPIC 1 – PRODUCT CONCEPT

LEARNING OBJECTIVES

After reading this module, student should be able to:

1. Understand the concept of a product

2. Discuss the anatomy of product

3. Explain how to classify products

4. Examine the concepts of product item, product line, and product mix, and
understand how they are connected
 COURSE MATERIALS

We are now prepared to introduce basic concepts and relationship that must be
understood to make effective product decisions through focusing on the major
components of the marketing mix exploring on the product component.

Figure 1.1
Product Description

The product is a key variable in the marketing mix. Products are typically a firm’s most
important asset.

WHAT IS A PRODUCT?

A product is a good, a service, or an idea received in an exchange. It is anything that can

be offered to a market to satisfy the desire or need of a customer. It can be classified as
tangible or intangible. A tangible product is a physical object that can be perceived by
touch such as a building, vehicle, gadget, or clothing. An intangible product is a product
that can only be perceived indirectly such as an insurance policy. A service can be broadly
classified under intangible products which can be durable or non- durable. It can be a
result of the application of human and mechanical efforts to people or objects. Examples
of services include online travel agency booking, a medical examination, child day care,
real estate services and martial arts lessons. An idea is a concept, philosophy, or image,
issues or inventions. Ideas provide the psychological stimulation that aids in solving
problems or adjusting to the environment. Example of an idea is the invention of light bulb
by General Electric or an internet load.

Product anatomy is the analysis of a product according to the different level of benefits
it offers.
 Figure 1.2

Three Levels of a Product

CORE product is the benefit of the product that makes it valuable. Example: in a car, the
benefit is convenience or the ease at which you can go where you like, when you want to.
Another is speed since you can travel around relatively quickly.

ACTUAL product is the tangible, physical product. You can get some use out of it. Again,
with the car example, it is the vehicle that you test drive, buy and the collect. You can
touch, see and feel it.

AUGMENTED product is the supplemental features provide added value or attributes in

addition to its core utility or benefit. So, when you buy a car, it is the warranty, the customer
service support offered by the car’s manufacturer and any after-sales service. It can also
provide installation, delivery, training and financing. These supplemental attributes are not
required to make the core product function effectively, but they help differentiate one
product brand from another.

CLASSIFICATION OF PRODUCTS

Product classifications are important, because classes of products are aimed at particular
target markets which affect distribution, promotion and pricing decisions, and the entire
marketing mix.

Consumer products – products purchased to satisfy personal and family needs. There
are four categories in classifying consumer products based on characteristics of consumer
buying behaviour.

• Convenience goods are relatively inexpensive, frequently purchased items for

which buyers exert only minimal purchasing effort. The buyer spends little time in
planning the purchase or comparing available brands or sellers, and many
consumers buy products at the closest location to preserve time and effort normally
through retail outlets. Examples are breads, newspaper, soft drinks
 • Shopping goods are goods in which the consumer is willing to invest a great deal
of time and effort. Buyers spend a lot of time comparing stores and brands with
respect to prices, product features, qualities, services and warranty. For example,
consumers will spend a great deal of time looking for a new car or a medical
procedure.

• Specialty goods are those that are of interest only to a narrow segment of the
population. Items with unique characteristics that buyers are willing to spend
considerable effort to obtain. Buyers actually plan the purchase of a specialty
product they know exactly what they want and will not accept a substitute. —e.g.,
the Swatch watch, Michael Jordan basketball shoes.

• Unsought products are products purchased when a sudden problem must be

solved, products of which consumers are unaware, and products that people do
not necessarily think of purchasing. Emergency medical services and automotive
repairs are examples of products needed quickly to solve a problem.

Business products – products bought to use in a firm’s operations, to resell, or to make

other product, usually purchased on the basis of an organization’s goals and objectives.
Generally, the functional aspects of the product are more important than the psychological
rewards. Business products can be classified into seven categories according to their
characteristics and intended uses.

• Installations include facilities such as office buildings, factories and warehouses as

well as major pieces of equipment that are non-portable, such as production lines
and very large machines.
• Accessory equipment does not become a part of the final physical product but is
used in production or office activities. Usually cheaper, purchased routinely with
less negotiation, and treated as expense items because they are not expected to
last long. Examples include file cabinets, calculators and tools.
• Raw materials are the basic natural materials that are used in marketing a physical
product. They include minerals, chemicals, agricultural products, and materials
from forests and oceans. They are usually bought and sold according to grades
and specifications and in relatively large quantities. Corn, for example, is a raw
material that is found in many different products, including food. Beverages (corn
syrup) and even fuel (ethanol).
• Components parts become part of the physical product and are either finished
items ready for assembly or products that need little processing before assembly.
Although they become part of a larger product, component parts often can be
easily identified and distinguished. Spark plugs, tires, clocks, brakes, and
headlights are all component parts of an automobile.
• Process materials are used directly in the production of other products not readily
identifiable. A salad dressing manufacturer may include vinegar in its salad
dressing; the vinegar is a process material, because it is included in the salad
dressing but is not identifiable.
• MRO supplies are maintenance, repair and operating items that facilitate
production and operations but do not become part of the finished product. Paper,
pencils, oils, cleaning agents, and paints are in this category.
 • Business services are the intangible products that many organizations use in their
operations. They include financial, legal, market research, information technology
and janitorial services. Firms must decide whether to provide their own services
internally or obtain them from outside the organization.

PRODUCT LINE vs. PRODUCT MIX

Marketers must understand the relationships among all the products of their organization
to coordinate the marketing of the total group of products. The following concepts help
describe the relationships among an organization’s products.

A product item is a specific version of a product that can be designated as a distinct

offering among an organization’s products. An Abercrombie and Fitch polo shirt
represents a product item.

A firm’s product line is a group of closely related product items that are considered to be
a unit because of marketing, technical or end-use considerations. It refers to the
assortment of similar things that the firm holds. Brother, for example, has both a line of
laser printers and one of typewriters.

In contrast, the firm’s product mix describes the combination of different product lines
that the firm holds. It is the composite, or total, group of products that an organization
makes available to customers. Procter & Gamble’s product mix comprises all the health-
care, beauty-care, laundry and cleaning, food and beverage, paper, cosmetic, and
fragrance products that the firm manufactures.

The width of product mix is measured by the number of product lines a company offers.
Some firms have one very focused or narrow product line (e.g., KFC does only chicken
right) while others maintain numerous lines that hopefully all have some common theme.
3M, for example, makes a large assortment of goods that are thought to be related in the
sense that they use the firm’s ability to bond surfaces together. The depth of product mix
refers to the average number of different products offered in each product line. It is the
variety that is offered within each product line. Maybelline offers a great deal of depth in
lipsticks with subtle differences in shades while Morton Salt offers few varieties of its
product.

Products may be differentiated in several ways. Some may be represented as being of

superior quality (e.g., Maytag), or they may differ in more arbitrary ways in terms of
styles—some people like one style better than another, while there is no real consensus
on which one is the superior one. Finally, products can be differentiated in terms of offering
different levels of service—for example, Volvo offers a guarantee of free, reliable towing
away here should the vehicle break down. American Express offers services not offered
by many other charge cards.