Republic of the Philippines

CAVITE STATE UNIVERSITY NAIC

(Formerly CAVITE COLLEGE OF FISHERIES)
Bucana Malaki, Naic, Cavite
www.cvsu-naic.edu.ph

Management Department
Bachelor of Science in Business Management
MKTG 60 – PRODUCT MANAGEMENT
BSBM Second Year

MODULE 3: PRODUCT AND SERVICE STRATEGIES

(WEEK 6)

Lesson 1: Individual Product Decisions

Lesson 2: Product Line Decisions
Lesson 3: Product Mix Decisions
Lesson 4: Product Life Cycle

Prepared by:

JULHMA P. FERNANDEZ
Instructor 1

Reviewed by:

PETER DANIEL Z. DIAZ RHONALYN C. PAPA

Chairperson, Management Department BSBM Program Coordinator

Noted by:

MAT M. NUESTRO
Director, Curriculum and Instruction
 PREFACE

This module aims to analyze product management typically deals with all of the end-to-end
aspects of a product or product line including product profitability, the role may be split with
closely related functions Product marketing, program management and project
management.

This provides the students with the importance of product management principles. They will
learn to analyze the business environment for strategic direction. They will prepare
operational plan. They will innovate ideas based on emerging industry. They will manage a
strategic business unit for economic sustainability. Also they will conduct business research
 ABOUT THE AUTHOR

The Author, Julhma P. Fernandez, is a part-time faculty member of the Management

Department of Cavite State University Naic. She finished Master in Business Administration
in Philippine Christian University and completed academic requirements in Doctor of
Philosophy in Business Management. She owned and manage different businesses in
Japan.

She is currently residing at Dasmariñas City.

 MODULE 3
PRODUCT AND SERVICE
STRATEGIES

This course will introduce students to the product and

service strategies..

What should you know?

This module is written for you to;

 Understand the different characteristics of a product mix.

 Recognize the stages and characteristics of the product life cycle.
 Identify appropriate marketing strategies for products in different life cycle stages
 Describe the limitations of the product life cycle concept.
 Discuss different product-mix and product-line strategies.

Instruction to learners:_________
1. The learner is advised to answer the pre-test to determine how much is already
known by the learner about the topic and the post-test to find out how far the learner
learned from the module.
2. Make sure to read the lecture notes thoroughly and jot down unfamiliar terms and
take time to research its definitions by any means possible.
3. You may also be asked to watch video clips related to certain topics so please be
mindful of footnotes regarding the links to such learning materials.
4. The answered pre-test and post-test (Activity 4) should be submitted on or before
April 2, 2022

LESSON 1
INDIVIDUAL PRODUCT DECISIONS

How much do you know?

PRE-TEST
Write at least 10 most valuable brands

What will you do?

Read the Information very well then find

out how much you can remember

Product everything, both favorable and unfavorable,

that
a person receives in an exchange

What do you need to you know?

Individual product decisions

We will focus on the important decisions in the development and marketing of individual
products
and services. These decisions are about product attributes, branding, packaging, labeling,
and
product support services. Companies have to develop strategies for the items of their
product
lines. Marketers make individual product decisions for each product including: product
attributes
decisions, brand, packaging, labeling, and product-support services decisions. Product
attributes
deliver benefits through tangible aspects of the product including features, and design as
well as
through intangible features such as quality and experiential aspects.

A brand is a way to identify and differentiate goods and services through use of a name or
distinctive design element, resulting in long-term value known as brand equity. The product
package and labeling are also important elements in the product decision mix, as they both
carry brand equity through appearance and affect product performance with functionality.
The level of product-support services provided can also have a major effect on the appeal of
the product to a potential buyer.

1. Product Attributes
Developing a product or service involves defining the benefits that it will offer. These
benefits are communicated to and delivered by product attributes such as quality,
features, style and design.
a. Product Quality
Quality is one of the marketer's major positioning tools. Product quality has
two dimensions— level and consistency. In developing a product, the
marketer must first choose a quality level that will support the product's
position in the target market. Here, product quality means performance quality
—the ability of a product to perform its functions beyond quality level, high
quality also can mean high levels of quality consistency. Here, product quality
means conformance quality—freedom from defects and consistency in
delivering a targeted level of performance. All companies should strive for
high levels of conformance quality.
b. Product Features
A product can be offered with varying features. A stripped-down model, one
without any extras, is the starting point. The company can create higher-level
models by adding more features. Features are a competitive tool for
differentiating the company's product from competitors' products. Being the
first producer to introduce a needed and valued new feature is one of the
most effective ways to compete. How can a company identify new features
and decide which ones to add to its product? The company should
periodically survey buyers who have used the product and ask these
questions:
How do you like the product? Which specific features of the product do you
like most? Which features could we add to improve the product? The answers
provide the company with a rich list of feature ideas. The company can then
assess each feature's value to customers versus its cost to the company.
Features that customers value little in relation to costs should be dropped;
those that customers value highly in relation to costs should be added.
c. Product Style and Design
Another way to add customer value is through distinctive product style and
design. Some companies have reputations for outstanding style and design.
Design is a larger concept than style. Style simply describes the appearance
 of a product. Styles can be eye catching or yawn producing. A sensational
style may grab attention and produce pleasing aesthetics, but it does not
necessarily make the product perform better. Unlike style, design is more
than skin deep—it goes to the very heart of a product. Good design
contributes to a product's usefulness as well as to its looks. Good style and
design can attract attention, improve product performance, cut production
costs, and give the product a strong competitive advantage in the target
market
2. Branding

Perhaps the most distinctive skill of professional marketers is their ability to

create, maintain, protect, and enhance brands of their products and services. A
brand is a name, term, sign, symbol, or design, or a combination of these, that
identifies the maker or seller of a product or service. Consumers view a brand as
an important part of a product, and branding can add value to a product. For
example, most
consumers would perceive a bottle of White Linen perfume as a high-quality,
expensive product. But the same perfume in an unmarked bottle would likely be
viewed as lower in quality, even if the fragrance were identical. Branding has
become so strong that today hardly anything goes unbranded. Branding helps
buyers in many ways. Brand names help consumers identify products that might
benefit them. Brands also tell the buyer something about product quality. Buyers
who always buy the same brand know that they will get the same features,
benefits, and quality each time they buy. Branding also gives the seller several
advantages. The brand name becomes the basis on which a whole story can be
built about a product's special qualities. The seller's brand name and trademark
provide legal protection for unique product features that otherwise might be
copied by competitors. Branding also helps the seller to segment markets.
a. Brand:
A brand is a name, sign, symbol, or design, or a combination of these that
identifies the maker or seller of a product or service.
b. Brand equity
is the value of a brand, based on the extent to which it has high brand loyalty,
name awareness, perceived quality, strong brand associations, and other
assets such as patents, trademarks, and channel relationships. Powerful
brand names command strong consumer preference and are powerful assets.
Perhaps the most distinctive skill of professional marketers is their ability to
create, maintain, protect, and enhance brands. Measuring the actual equity of
a brand name is difficult. However, the advantages of having it include:
1). High consumer awareness and loyalty.
2). Easier to launch brand extensions because of high brand
credibility.
3). A good defense against fierce price competition.
4). It is believed to be the company’s most enduring asset. Customer
equity tends to aid marketing planning in assuring loyal customer
lifetime value.
c. Selecting The Brands Name:
Selecting a brand name is an important step. The brand name should be
carefully chosen since a good name can add greatly to a product’s
success. Desirable qualities of a good brand name include:
1). It should suggest something about the product’s benefits and
qualities.
2). It should be easy to pronounce, recognize, and remember.
3). It should be distinctive.
4). It should translate easily into foreign languages.
 5). It should be capable of registration and legal protection. Once
chosen, the brand name must be protected.
d. Sponsorship options for Branding:
A manufacturer has four sponsorship options:
1). A manufacturer’s brand (or national brand) is a brand created and
owned by the producer of a product or service (Examples include IBM
and Kellogg).
2). A private brand (or middleman, distributor, or store brand) is a
brand created and owned by a reseller of a product or service.
3). A licensed brand (a company sells it’s output under another brand
name).
4). Co-branding occurs when two companies go together and
manufacture one product (General Mills and Hershey’s make Reese’s’
Peanut Butter Puffs cereal). Combined brands create broader
customer appeal and greater brand equity. It may allow a company to
expand its existing brand into a category it might otherwise have
difficulty entering alone. But at the same time there are certain
disadvantages of combine branding like:
 Complex legal contracts and licenses are involved.
 Coordination efforts are often difficult.
 Trust is essential between partners. It is often hard to come by.
At one time manufacturer’s brands were the most popular and profitable.
Today, however, an increasing number of private brands are doing well.
Though hard to establish and maintain, private brands can yield higher profit
margins. “The battle of the brands” (the competition between manufacturer’s
and private brands) causes resellers to have advantages, and they charge
manufacturer’s slotting fees (payments demanded by retailers from producers
before they will accept new products and find “slots” for them on the shelves).
As store brands are improving in quality, they are posing a stronger threat to
the manufacturer’s brands. This is especially true in supermarkets.
e. Branding Strategy:
A company has four choices when it comes to brand strategy. It can:
1). Introduce line extensions. Existing brand names are extended to new
forms, sizes, and flavors of an existing product category. A company might
introduce line extensions as a low-cost, low-risk way of introducing new
products in order to:
a). Meet consumer desires for variety.
b). Meet excess manufacturing capacity.
c). simply command more shelf space.
Risks include:
a). An overextended brand might lose its specific meaning.
b). Can cause consumer frustration or confusion.
2). Introduce brand extensions. Existing brand names are extended to new or
modified product categories. Advantages include:
a). Helps a company enter new product categories more easily.
b). Aids in new product recognition.
c). Saves on high advertising cost.
3). Introduce multibrands. New brand names are introduced in the same
product category. Advantages include:
a). They gain more shelf space.
b). Offering several brands to capture “brand switchers.” The company
can establish flanker or fighter brands to protect its major brand.
c). It helps to develop healthy competition within the organization.
Drawbacks include:
 a). Each brand may only obtain a small market share and be
unprofitable.
4). Introduce new brands. New brand names in new categories are
introduced.
Advantage include:
a). Helps move away from a brand that is failing.
b). Can get new brands in new categories by corporate acquisitions.
Some companies are now pursuing mega brand strategies.
Drawbacks can include:
a). Spreading resources too thin.

3. Packaging
Packaging involves designing and producing the container or wrapper for a product.
The package may include the product's primary container (the tube holding Colgate
toothpaste); a secondary package that is thrown away when the product is about to
be used (the cardboard box containing the tube of Colgate); and the shipping
package necessary to store, identify, and ship the product (a corrugated box carrying
six dozen tubes of Colgate toothpaste). Labeling, printed information appearing on or
with the package, is also part of packaging. Traditionally, the primary function of the
package was to contain and protect the product. In recent times, however, numerous
factors have made packaging an important marketing tool. Increased competition and
clutter on retail store shelves means that packages must now perform many sales
tasks—from attracting attention, to describing the product, to making the sale.
Companies are realizing the power of good packaging to create instant consumer
recognition of the company or brand. Developing a good package for a new product
requires making many decisions. First, the company must establish the packaging
concept, which states what the package should be or do for the product. Should it
mainly offer product protection, introduce a new dispensing method, suggest certain
qualities about the product, or something else? Decisions then must be made on
specific elements of the package, such as size, shape, materials, color, text, and
brand mark. These elements must work together to support the product's position
and marketing strategy. The package must be consistent with the product's
advertising, pricing, and distribution.

4. Labeling
Labels may range from simple tags attached to products to complex graphics that are
part of the package. They perform several functions. At the very least, the label
identifies the product or brand, such as the name Sunkist stamped on oranges. The
label might also describe several things about the product—who made it, where it
was made, when it was made, its contents, how it is to be used, and how to use it
safely. Finally, the label might promote the product through attractive graphics.

5. Product Support Services

Customer service is another element of product strategy. A company's offer to the
marketplace usually includes some services, which can be a minor or a major part of
the total offer. Here, we discuss product support services— services that augment
actual products. More and more companies are using product support services as a
major tool in gaining competitive advantage. A company should design its product
 and support services to profitably meet the needs of target customers. The first step
is to survey customers periodically to assess the value of current services and to
obtain ideas for new ones. For example, Cadillac holds regular focus group
interviews with owners and carefully watches complaints that come into its
dealerships. From this careful monitoring, Cadillac has learned that buyers are very
upset by repairs that are not done correctly
the first time. Once the company has assessed the value of various support services
to customers, it must next assess the costs of providing these services. It can then
develop a package of services that will both delight customers and yield profits to the
company.

LESSON 2
PRODUCT lines decision

PRODUCT LINE
  a group of closely related products sold by a business
 Product line managers takes product line decisions considering the sales and profit
of each item in the line and comparing their product line with the competitors’ product
lines in the same market.

PRODUCT ITEMS
 a specific model, brand,
or size of a product within
a product line

PRODUCT WIDTH & DEPTH

 The width and depth of a company’s product offerings defines the product mix

PRODUCT WIDTH
 The number of
different product
lines sold by one
manufacturer

PRODUCT DEPTH
 The number
of product
items within
each
specific
product line
 From one
brand name
 LESSON 3
PRODUCT MIX DECISIONS

PRODUCT MIX
  All products that an organization sells.
 Consists of various product lines that an organization offers, an organization may
have just one product line in its product mix and it may have multiple product lines
 To determine a company’s product mix, a business needs to identify:
o Its target market
o Its competitors
o The image it wants to project
 The product mix must be periodically reviewed to determine if products need to be
expanded, modified, decreased, or eliminated

FOUR DIMENSIONS OF PRODUCT MIX

 Width
 Length
 Depth
 Consistency

WIDTH
 The width of an organization’s product mix pertains to the number of product lines
that an organization is offering

LENGTH
 The length of an organization’s product mix pertains to the total number of products
or items in the product mix

DEPTH
 The depth of an organization’s product mix pertains to the total number of variants of
each product offered in the line
CONSISTENCY
 The consistency of an organization’s product mix refers to how closely related the
various product lines are in use, production, distribution, or in any other manner
 LESSON 4
PRODUCT LIFE CYCLE

A
new product progresses
through a sequence of stages
from introduction to growth,
maturity and decline. This
sequence known as the
product life cycle and is
associated with changes in the
marketing situation, thus
impacting the marketing strategy and the marketing mix.

The product life cycle (PLC) describes the life of a product in the market with respect to
business/commercial costs and sales measures. It proceeds through multiple phases,
involves many professional disciplines and requires a multitude of skills, tools and
processes.

This is not to say that product lives cannot be extended – there are many good examples of
this – but rather, each product has a ‘natural’ life through which it is expected to pass.
The stages of the product life cycle are:

 Introduction
 Growth
 Maturity
 Decline

PLC management makes these three assumptions:

1. Products have a limited life and, thus, every product has a life cycle.
2. Product sales pass through distinct stages, each of which poses different challenges,
problems and opportunities to its parent company.
3. Products will have different marketing, financing, manufacturing, purchasing and
human resource requirements at the various stages of its life cycle.

INTRODUCTION STAGE
This stage is characterized by a
low growth rate of sales as the
product is newly launched and
consumers may not know much
about it. Traditionally, a company
usually incurs losses rather than
profits during this phase.
Especially if the product is new
on the market, users may not be
aware of its true potential,
necessitating widespread
information and advertising
campaigns through various
media.

However, this stage also offers its

share of opportunities. For
example, there may be less
competition. In some instances, a
monopoly may be created if the product proves very effective and is in great demand.

Characteristics of the introduction stage are:

 High costs due to initial marketing, advertising, distribution and so on.

 Sales volumes are low, increasing slowly
 There may be little to no competition
 Demand must be created through promotion and awareness campaigns
 Customers must be prompted to try the product.
  Little or no profit is made owing to high costs and low sales volumes

GROWTH STAGE

The growth stage is the period

during which the product
eventually and increasingly gains
acceptance among consumers,
the industry, and the wider
general public. During this stage,
the product or the innovation
becomes accepted in the market,
and as a result sales and
revenues start to increase. Profits
begin to be generated, though
the break even point is likely to
remain unbreached for a
significant time–even until the
next stage, depending on the
cost and revenue structures.

Initial distribution is expanded

further as demand starts to rise.
Promotion is increased beyond
the initially high levels, and word-
of-mouth advertising leads to more and more potential customers hearing about the product,
trying it out, and–if the company is lucky–choosing to use the product regularly. Repeat
orders from initial buyers are also obtained.

If a monopoly was initially created, then it still exists in this stage. Because of this, the
manufacturing company can look at ways to introduce new features, alterations, or other
types of innovation to the product according to feedback from consumers and from the
market in general. This would be done in order to maintain growth in sales and ensure that
interest in the product continues to grow and not stagnate, thus maintaining the growth
stage. In fact, the growth stage is seen as the best time to introduce product innovations, as
it creates a positive image of the product and diminishes the presence of competitors who
will be attempting to copy or improve the product, and present their own products as a
substitute.

Features of the growth stage:

Costs reduced due to economies of scale: as production and distribution are ramped up,
economies of scale kick in and reduce the per unit costs.

 Sales volume increases significantly: as the product increases in popularity, sales

volumes increase.
 Profitability begins to rise: revenues begin to exceed costs, creating profit for the
company
 Public awareness increases: through increased promotion, visibility and word of
mouth, public awareness grows.
 Competition begins to increase with a few new players in establishing market
  Increased competition leads to price decreases: price wars may erupt, technology
may get cheaper, or other factors can ultimately lead to falling prices.

MATURITY

During this stage, sales

growth has started to slow
down, and the product has
already reached widespread
acceptance in the market, in
relative terms. Ultimately,
during this stage, sales will
peak. The company will want
to prolong this phase so as to
avoid decline, and this desire
leads to new innovation and
features in order to continue
to compete with the
competition which, by now,
has become very established,
advanced and fierce.
Competitors ‘ products will
begin to cut deeply into the
company’s market position
and market share. However,
despite this, sales continue to
grow in the early part of the maturity phase. But, these sales will peak and ultimately decline,
as the graph shows.

Demand for the product ultimately decreases due to competition and market saturation, as
well as new technologies and changes in consumer tastes. Actions the company takes may
include:

 Improving specific features in order to resell the product (for instance, in the case of a
car, the manufacturer may include alloy wheels, new colors, sport or hybrid versions,
or other changes in order to keep sales going);
 Lowering prices in order to fight off competition;
 Intensifying distribution and promotional efforts;
 Differentiation efforts, in the hope that new customers will start to buy the product.
 Finding a new targeted market.

The stage that lasts the longest in the product life cycle is the Maturity stage. It is at this time
that repeat business and purchases take the place of new customer buying. So, during the
maturity stage, the following occurs:

 Costs are lowered as a result of production volumes increasing and experience curve
effects
 Sales volume peaks and market saturation is reached
 Increase in numbers of competitors entering the market
 Prices tend to drop due to the proliferation of competing products
 Brand differentiation and feature diversification is emphasized to maintain or increase
market share
 Industrial profits go down
DECLINE

Profitability will fall,

eventually to the
point where it is no
longer profitable to
produce, and
production will
stop. As a number
of companies start
to dominate the
market, it becomes
increasingly
difficult for the
company in
question to
maintain its level of
sales. Consumer
tastes also
change, as do new
technologies which
may make the
product become
ultimately obsolete
(as in the case of
CDs and DVDs,
and now Blu-Ray).

Features of the decline stage include:

 A decline in sales volume as competition becomes severe, and popularity of the

product falls;
 A fall in prices and profitability (the latter ultimately moving in the negative zone);
 A counter-optimal cost structure;
 Profit increasingly becomes a challenge of production/distribution efficiency rather
than increased sales.

It is important to note that product termination is not usually the end of the business cycle;
rather, it is only the end of a single entrant within the larger scope of an on-going business
program.
How Do You Apply What You Have Learned?
Show that you learned something by doing this activity

ACTIVITY 4

How Well Did You Perform?

 Make product line and product mix decisions examples

What’s next?

Kindly watch the video by visiting the link

https://www.youtube.com/watch?v=5EvBaM2cd9o

REFERENCES

 Crawford, M e.al (2015). New Products Management. 11th Edition. McGraw –

Hill Education
 Kotler, P. et al (2014). Marketing Management. 15th Edition. Pearson
 Medina, R.G. (2012). Principles of Marketing. Revised Edition. Published by
Rex Bookstore