Product Management

PhilCST
PHILIPPINE COLLEGE OF SCIENCE & TECHNOLOGY

OLD NALSIAN ROAD, BRGY. NALSIAN, CALASIAO, PANGASINAN
(Product Management by: Dr. Cristina L. Tagura
Director of Research and Graduate Studies)
MODULE 3: PRODUCT MANAGEMENT

>PRODUCT RANGE ANALYSIS, >PRODUCT MIX
>PRODUCT LINE ANALYSIS, >SWOT ANALYSIS
>PRODUCT LIFE CYCLE AND >PRODUCT RANGE STRATEGIES
OBJECTIVES: At the end of the Module, the students should be able to:
(1) demonstrate understanding of various product assortments which of product
range and the product mix.
(2) compare and contrast the stages in the Product Life Cycle.
(3) situate how product range strategies are being applied in a company
(4) generate analysis on how the strategies in addressing the product life cycle
and the product range can create competitive advantage in the business.
(5) Assess the innovation strategies of companies which started from humble
beginnings.
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(3) Action Taken: Drop the product line (sales volume and sales margin are low).
Characteristics of Product Range/Product Lines:

(1) They are closely related in form and/or function
(2) They are similarly priced
(3) They are marketted and sold through similar customer groups
(4) There are varieties of sizes, colors, tastes or functionality t appeal to wide range of potential
customers.
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B. PRODUCT MIX
>It is a set of all products offered for sale by a company consists of both product lines and
individual products.
>It has four dimensions: (1) Width, (2) Length, (3) Depth, (4) Consistency
Width >It pertains to the number of product lines that the organization is offering.
Length >It pertains to the total number of products or items in the product mix.
Depth >It pertains to the total number of variants of each product offered in the line.
Consistency >It refers to how closely related the various product lines are in use,
production, distribution, or in any other manner.
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I. PRODUCT RANGE ANALYSIS

C. Product Range or Product Line >It is a group of products that a company creates under a single
brand.
Product Range or Product LIne Analysis >It refers to analyzing the relationships between product
items and their attributes
>Product line analysis help companies to develop a basic platform to meet different
customers requirements and lowe production costs.
Example: >Among the product range/product line in a company which consists of A,B,C,D,E,
products, E is failing in terms of sale analysis:
(1) Problem..Product E is failing in the field. (2) Cause..

Component/Purpose of the product is not fit anymore
(3) Action Taken: Drop the product line to satisfy customer needs.Example: Notebooks are not
(sales volume and sales margin are low). needed primarily during online classes
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Why Product line Analysis? (1) It provides better market access
(2) It involves huge investment/disinvestment (3) Products have close mutual influence
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TOOLS/METHODS IN ANALYZING PRODUCT RANGE:

A. SWOT ANALYSIS (Strength, Weakness,
Opportunity, and Threat (SWOT)
>It is used as framework for

organizing and using data and
information gained from situation
analysis of internal and external
environment.
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B. OPERATIONAL DIMENSION ABC METHOD

(ABC - Activity-Based Costing)
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ACTIVITY-BASED COSTING
>It is a management accounting approach

which allocate all direct and indirect(overhead)
costs to cost objects (products and services)
in order to help-management understand
critical business information.
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C. STRATEGIC APPROACHES
>(1) BCG - Boston Consulting Group’s

Product Portfolio Matrix
>It pertains to business model which is based

on providing products or services that will
keep the company profitable in the future.
>It is a strategy for analyzing products

according to growth and relative market share.
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Here is a breakdown of each BCG matrix quadrant:
Stars: The business units or products that have the best market share and generate the most
cash are considered stars. Monopolies and first-to-market products are frequently termed stars.
However, because of their high growth rate, stars consume large amounts of cash. This
generally results in the same amount of money coming in that is going out. Stars can eventually
become cash cows if they sustain their success until a time when a high growth market slows
down. A key tenet of BCG strategy for growth is for companies to invest in stars.
Cash Cows: A cash cow is a market leader that generates more cash than it consumes. Cash
cows are business units or products that have a high market share but low growth prospects.
According to NetMBA, cash cows provide the cash required to turn a question mark into a
market leader, cover the administrative costs of the company, fund research and development,
service the corporate debt, and pay dividends to shareholders. Companies are advised to invest
in cash cows to maintain the current level of productivity or to "milk" the gains passively.
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Dogs: Dogs, or pets as they are sometimes referred to, are units or products that
have both a low market share and a low growth rate. They frequently break even,
neither earning nor consuming a great deal of cash. Dogs are generally considered
cash traps because businesses have money tied up in them, even though they are
bringing back basically nothing in return. These business units are prime candidates
for divestiture.
Question Marks: These parts of a business have high growth prospects but a low
market share. They consume a lot of cash but bring little in return. In the end, question
marks lose money. However, since these business units are growing rapidly, they
have the potential to turn into stars in a high growth market. Companies are advised to
invest in question marks if the product has the potential for growth, or to sell if it does
not.
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HOW TO USE THE BCG MATRIX TO STRATEGIZE:
>(1) Increase Investment in a product to increase its market share
>Question mark Sta Cash Cow
>(2) If a company can not invest more into a product, hold it in the same quadrant and
leave it be.
>(3) Company may reduce investment and try to take out the maximum cash flow from
the product, which increases its overall profitability (best for each cows)
>(4) Release the amount of money already stuck in the business (best for cash cows)
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APPLICATION: A Real-Life BCG Matrix Example
In the Coca-Cola BCG matrix example, Diet Coke and Minute Maid are question marks, as these
names attract a modest audience but still have plenty of room to grow. Its bottled water brands
Kinley and Dasani are stars since they dominate the market in, respectively, Europe and the
U.S. and show no signs of slowing growth.
Its own titular drink is a cash cow since it experiences low growth despite its high market share,
a categorization that makes sense given Coca-Cola's ubiquity among soft drinks. However,
Coca-Cola is also a dog, because legislation against soft drinks – not to mention public
sentiment turning against them – has lessened soda sales. Coca-Cola's real-life BCG matrix
example provides an important takeaway: Sometimes, a product can fall into more than one
category.
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2. MC KINSEY STRATEGY (MC Kensey Consulting Firm)

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3. ADL MATRIX (or STRATEGIC CONDITIONS MATRIX)

(ADL - Arthur Dehun Little)
(ADL - Management Consultancy)
>It is a strategy used analyzing

company’s competitive position and
industry motivity.
>It allows a company to manage its

portfolio by making judgements
around the overall market lifecycle and
its own placement within that market
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The industry is classified as:
>Embryonic
>Growth
>Mature
>Aging
The competitive position is classified

as:
>Dominant
>Strong
>Favourable
>Tenable
>Weak
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II. PRODUCT LIFE CYCLE

Philipi Rotter. It is an attempt to recognize
the distinct stages in the sales history of
the product.
William Stanton. It is the explanation of

the product from its birth to death as a
product exists in different stages and in
differen competitive environments.
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STAGE DESCRIPTION MAIN ISSUES

1. Introduction >The product is launched in the market >1. Low and slow sales
with full scale production and marketing >2. High Product Price
program >3. Heavy Promotional
>Product is new one either because: Expenses
a) it opens up ane entirely new market >4. Low Profits
b) it replaces an existing product >5. Narrow Product lines
c) it broaders market of existing product
2. Growth >when the product achieves considerable >1. Rapid increase in sales that
and widespread apprroval in the market there maybe issue on production
>product achieves considerable and >2. Responsibilities of distribution
widespread approval in the market channels
>3. Increase in competition
>4. Continous innovation/product
improvement
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STAGE DESCRIPTION MAIN ISSUES

3. Maturity >market becomes saturated because the >1. Sales increases at decreasing
Stage household demand is satisfied and rates
distributin channels are full. >2. Product modefications
>Profit margin declines due to keen >3. Dealer’s support is weakened
competition >4. Profit margin decreases
>It is the final stage, sooner or later actual 1. Rapid decrease in sales
sales begin to fall under 2. Suspension of production work
4. Decline a) the impact of new product competition 3. Low sales with further decrease
Stage b) changing consumer behavior in prices.
c) drastic cutting of promotional
expenditure
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EXTENSION OF PLC
FACTORS AFFECTING THE PLC
1. Product Modification
1. Rate of Technological change
2. Entry in the new market
2. Rate of market acceptance
3. Promoting frequent use
3. Competition’s entry
4. Developing different usage
4. Economic and managerial forces
5. Finding new uses
5. Risk-bearing capacity
6. use of modern advertising and sales
6. Government Policy
promotion techniques
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APPLICATION:
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Further Readings: Kotter/Keller -

Marketing Management Chapter
14
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III. PRODUCT RANGE STRATEGIES

BASIC STRATEGIES
A. COST LEADERSHIP STRATEGY
>It is a strategy that companies use to increase efficiencies and reduce production costs below the
industry average or their closest competitor
>It is a method to reduce costs and produce the least expensive goods in a market or industry in
an effort to gain market share.
B. PRODUCT (LINE) DIFFERENTIATION
>It is the introduction of unique, distinctive characteristics or features to a product to ensurea USP
(unique selling proportion of the product)
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>It enables a company to achieve a competitive advantage over other companies offering similar
product substitutes
C. FOCUS STRATEGY
>It implies a focus on a specific product

market segment with the goal of establishing a
monopoly
BENEFITS OF FOCUS STRATEGIES

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DEVELOPMENT STRATEGIES
>(1) Competitive Scenario
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>(2) Intensification Strategy

A. MARKET PENETRATION
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B. MARKET DEVELOPMENT
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C. PRODUCT DEVELOPMENT
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>(3) Integration Strategy
>It is called management control strategy because it allows a firm to gain control over
distributors, suppliers, and/ or competitors
Integration Strategy Concept Example
A. Vertical >It is a strategy in which a firm Carnegie Steel Company owned mills
owns its upstream suppliers and where the steel was manufactured,
its downstream buyers. mines where the ion ore was extracted,
coal mines that supplied the coal, ships
and railroads that transported the
material.
1. Background >This is why a company owns >When an automobile company owns a
some of the subsidiaries that time company
produce some of the inputs
used in the production of
products
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Integration Strategy Concept Example

2. Forward >This is when a company owns >A movie studio that also own a chain of
the subsidiaries that market the theaters/cinemas.
product
B. Horizontal >It is the addition of other >Standard oil company buying refineries
business activities at the same >a radio station that also owns a
level of the value chain newspaper and magazine
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>(4) Competitive Strategy

Competitors Concept Strategies
(Positions)
1. Leader >It is a company that has the A. (1) Proactive marketing innovate
largest market share and it continuously
determines the nature, pace and (2) Redesign relationship within an industry
bases of competition by virtue of (3) Anticipate and create customer needs
its: B. Defensive Marketing
(1) Pricing (1) Position Defense
(2) Advertising intensity >occupying the most desirable market space
(3) Distribution coverage in consumer mind
(4) Technological advance (2) Counter Offensive Defense
(5) Rate of new product >subsidizing lower prices, attaching head-on
introductions announce produce upgrades so that
customers don’t switch.
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>(4) Competitive Strategy cont’d

(Positions)
2. Challenger >It is a company which occupies the (1) Indirect attack
second, third or fourth positions in the >entering into those markets where the
market competitors do not have a presence
>It can attack vulnerable areas of the (2) Attacking the leader in its weak spots
leader but it should have sufficient
resources to sustain the attack.
3. Follower >It prefers to follow the leader rather >manufacturing products leveraging on the
than attack it. products innovations of the market leaders.
>If follower attacks a market leader with >follow the market leader
the same quality offerings and at the
same price, it might have to face severe
attacks from the market leaders.
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>(4) Competitive Strategy cont’d

(Positions)
4. Nicker >It focuses usually in all his resources to >gaining the loyalty of customers in the
efficiently serve a small market segment segment
>operating in small segment of the market in
which the leader is not interested.
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GOOD DAY EVERYONE!

Dr. Cristina L. Tagura
(Director for Research and Graduate Studies)

Product Management

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PhilCST

PHILIPPINE COLLEGE OF SCIENCE & TECHNOLOGY

MODULE 3: PRODUCT MANAGEMENT

Characteristics of Product Range/Product Lines:

(2) They are similarly priced

I. PRODUCT RANGE ANALYSIS

(1) Problem..Product E is failing in the field. (2) Cause..

Why Product line Analysis? (1) It provides better market access

TOOLS/METHODS IN ANALYZING PRODUCT RANGE:

>It is used as framework for

B. OPERATIONAL DIMENSION ABC METHOD

>It is a management accounting approach

>(1) BCG - Boston Consulting Group’s

>It pertains to business model which is based

>It is a strategy for analyzing products

Here is a breakdown of each BCG matrix quadrant:

HOW TO USE THE BCG MATRIX TO STRATEGIZE:

>(1) Increase Investment in a product to increase its market share

>Question mark Sta Cash Cow

APPLICATION: A Real-Life BCG Matrix Example

2. MC KINSEY STRATEGY (MC Kensey Consulting Firm)

3. ADL MATRIX (or STRATEGIC CONDITIONS MATRIX)

(ADL - Management Consultancy)

>It is a strategy used analyzing

>It allows a company to manage its

The industry is classified as:

The competitive position is classified

II. PRODUCT LIFE CYCLE

William Stanton. It is the explanation of

STAGE DESCRIPTION MAIN ISSUES

STAGE DESCRIPTION MAIN ISSUES

Further Readings: Kotter/Keller -

III. PRODUCT RANGE STRATEGIES

B. PRODUCT (LINE) DIFFERENTIATION

>It implies a focus on a specific product

BENEFITS OF FOCUS STRATEGIES

>(2) Intensification Strategy

>(3) Integration Strategy

Integration Strategy Concept Example

>(4) Competitive Strategy

>(4) Competitive Strategy cont’d

>(4) Competitive Strategy cont’d

GOOD DAY EVERYONE!

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