WEEK 8 PRODUCT MANAGEMENT

WE WILL START @10:10AM

WEEK 8 PRODUCT MANAGEMENT

WEEK 7 PRODUCT MANAGEMENT

MANAGING PRODUCT:

PRODUCT PORTFOLIO &

PRICING

WEEK 7 PRODUCT MANAGEMENT

 WEEK 7 PRODUCT MANAGEMENT

TOPICS LEARNING OBJECTIVES

• MANAGING PRODUCTS 1. explain Product Portfolio and its need
2. identify who is responsible for product
• Product Portfolio
portfolio decisions
• Product Pricing 3. Identify the tools used in evaluating
products
4. Understand the concept of Pricing and its
objectives
5. Identify the Steps to undertake Product
Pricing
6. analyze types of pricing and its benefits

WEEK 7 PRODUCT MANAGEMENT

 PRODUCT PORFOLIO

WEEK 7 PRODUCT MANAGEMENT

WEEK 7 PRODUCT MANAGEMENT

WHAT IS PRODUCT Let us see what

PORTFOLIO?
all effects a new A new product
will need to
be advertised

product would
more than an
existing

 the range of products product in

order to make

that a company has in have on an the customer

aware about
it.

the market in order to existing product:

conduct its business
profitably is known as
its PRODUCT PORTFOLIO
 also referred to as
PRODUCT MIX
WEEK 7 PRODUCT MANAGEMENT The profitability
of each product
is not the same
and so if sales o
a new product
which is not as
profitable
affects another
much more
profitable
product it is not
for the overall
benefit of the
company.

WHAT IS PRODUCT
PORTFOLIO? Let us see
what all
 the range of products effects a new
product
that a company has in would have
the market in order to on an
conduct its business A new product will existing
profitably is known as need to be advertised product:
its PRODUCT PORTFOLIO more than an existing
 also referred to as product in order to In the
distribution
channel the

PRODUCT MIX make the customer distributor will

have to
allocate some
aware about it. resources in
terms of
storage
WEEK 7 PRODUCT MANAGEMENT A new produ
will need to
be advertise
more than an
existing
product in
order to mak
the customer
aware about
it.

WHAT IS PRODUCT
PORTFOLIO? Let us see
what all
 the range of products effects a new
product
that a company has in would have
the market in order to on an
conduct its business In the distribution existing
profitably is known as channel the distributor product:
its PRODUCT PORTFOLIO will have to allocate
 also referred to as some resources in The new

PRODUCT MIX terms of storage space, product will

also occupy
shelf space

finance, selling and and may

displace an
existing
WEEK 7 PRODUCT MANAGEMENT In the
distribution
channel the
distributor w
have to
allocate som
resources in
terms of
storage
space,
finance,
selling and
delivery effo
to this new
product.

WHAT IS PRODUCT
PORTFOLIO? Let us see
what all
 the range of products effects a new
product
that a company has in would have
the market in order to on an
conduct its business The new product existing
profitably is known as
its PRODUCT PORTFOLIO will also occupy product:

 also referred to as shelf space and

PRODUCT MIX may displace an The production f
will have to alloc
resources for

existing product.
manufacturing th
product storing r
material and fini
WEEK 7 PRODUCT MANAGEMENT The new
product will
also occupy
shelf space
and may
displace an
existing
product.

WHAT IS PRODUCT
PORTFOLIO? Let us see
what all
 the range of products effects a new
product
that a company has in would have
the market in order to on an
conduct its business The production facility existing
profitably is known as will have to allocate product:
its PRODUCT PORTFOLIO resources for
 also referred to as manufacturing the The profi
of each p
is not the

PRODUCT MIX product storing raw and so if

a new pr
which is

material and finished

profitabl
affects a
much mo
profitabl
product
WEEK 7 PRODUCT MANAGEMENT The productio
will have to a
resources for
manufacturin
product storin
material and
goods.

WHAT IS PRODUCT
PORTFOLIO? Let us see
what all
 the range of products effects a new
product
that a company has in would have
the market in order to The profitability of each on an
conduct its business product is not the same and existing
profitably is known as so if sales of a new product product:
its PRODUCT PORTFOLIO which is not as profitable
 also referred to as affects another much more A new
will ne

PRODUCT MIX profitable product it is not be ad

more

for the overall benefit of the existin

produ
order
company. the cu
 RESPONSIBILITY FOR PRODUCT
PORTFOLIO MANAGEMENT

This committee
Product Portfolio This team, meets at regular
Management is which is intervals to
the responsibility undertakes this manage the
of the senior
management
process, is PRODUCT
normally called PIPELINE and
team of an
the PRODUCT makes decisions
organization or
about the product
business unit. COMMITTEE. portfolio.

WEEK 7 PRODUCT MANAGEMENT

 RESPONSIBILITY FOR PRODUCT
PORTFOLIO MANAGEMENT

This committee
Product Portfolio This team, meets at regular
Management is which is intervals to
the responsibility undertakes this manage the
of the senior
management
process, is PRODUCT
normally called PIPELINE and
team of an
the PRODUCT makes decisions
organization or
about the product
business unit. COMMITTEE. portfolio.

WEEK 7 PRODUCT MANAGEMENT

 RESPONSIBILITY FOR PRODUCT
PORTFOLIO MANAGEMENT

This committee
Product Portfolio This team, meets at regular
Management is which is intervals to
the responsibility undertakes this manage the
of the senior
management
process, is PRODUCT
normally called PIPELINE and
team of an
the PRODUCT makes decisions
organization or
about the product
business unit. COMMITTEE. portfolio.

WEEK 7 PRODUCT MANAGEMENT

 RESPONSIBILITY FOR PRODUCT
PORTFOLIO MANAGEMENT

This committee
Product Portfolio This team, meets at regular
Management is which is intervals to
the responsibility undertakes this manage the
of the senior
management
process, is PRODUCT
normally called PIPELINE and
team of an
the PRODUCT makes decisions
organization or
about the product
business unit. COMMITTEE. portfolio.

WEEK 7 PRODUCT MANAGEMENT

 RESPONSIBILITY FOR PRODUCT
PORTFOLIO MANAGEMENT
The process of Portfolio Management starts at
the time of The product
Product must now be
Product The next step is
evaluated for
The
Strategy
objectives are to understand competitor’
needed to meet the
defined the resources/
this is outlined
budget investment s products
by defining needed, the available in
In this stage the available given
customers,
amounts needed
markets,
the fact that profit it is the market
to develop the several products likely to and likely
competitor
product, its (existing and generate and
expected sales
analysis, the
new) may need response
competitive the risks
and profits are to be supported from
need for the associated
laid down in the market. competition.
product etc. with the
product.

WEEK 7 PRODUCT MANAGEMENT

 SOME TOOLS THAT ARE USED IN
THE ANALYSIS

The BCG The SWOT Ansoffs

Matrix Analysis Matrix

WEEK 7 PRODUCT MANAGEMENT

THE BCG MATRIX
WEEK 7 PRODUCT MANAGEMENT
 The BCG Matrix or the
Boston Consulting Group
Matrix is a well known
method of evaluating
products.

developed by the Boston

SOME TOOLS THAT Consulting Group in the
ARE USED IN THE 1970‘s
ANALYSIS

provided for a clear and

simple method for
companies to decide which
The BCG part of their business to
allocate resources.
Matrix
helps decide where to
apply other finite
resources: people, time
WEEK 7 PRODUCT MANAGEMENT and equipment
 MARKET SHARE
SOME TOOLS THAT
ARE USED IN THE
ANALYSIS
MARKET GROWTH

The BCG To understand the Boston Matrix we

need to understand how market
Matrix share and market growth are
interrelated.

WEEK 7 PRODUCT MANAGEMENT

 To understand the Boston Matrix we need to
understand how market share and market
growth are interrelated.

MARKET SHARE
SOME TOOLS THAT Market share is the percentage
ARE USED IN THE of the total market that is being
ANALYSIS serviced by the company,
measured either in revenue
terms or unit volume terms. The
higher the market share, the
The BCG higher the percentage of market
controlled by the company.
Matrix
The Boston Matrix assumes that if
the company has a high market
WEEK 7 PRODUCT MANAGEMENT share it will be making profit.
 To understand the Boston Matrix we need to
understand how market share and market
growth are interrelated.

MARKET GROWTH

SOME TOOLS THAT Market Growth is used as a

ARE USED IN THE measure of the market’s
ANALYSIS attractiveness.

For a market to be attractive or

having high growth it must be
The BCG expanding and so it will be easier
for the company to make a more
Matrix profits even if their market share
remains the same.

WEEK 7 PRODUCT MANAGEMENT

 UNDERSTANDING THE MATRIX

HIGH

MARKET GROWTH
QUESTION
STARS
SOME TOOLS THAT MARKS
High Market
ARE USED IN THE Low Market
ANALYSIS Share / High
Share / High
Market Growth
Market Growth
DOGS CASH COWS
Low Market High Market
The BCG Share / Low Share / Low
Matrix LOW Market Growth Market Growth
LOW MARKET SHARE HIGH

WEEK 7 PRODUCT MANAGEMENT

 S O M E T O O L S T H AT A R E U S E D I N T H E
A N A LY S I S
UNDERSTANDING THE MATRIX
The BCG Matrix Low Market Share / Low
Market Growth- DOGS
HIGH QUESTION
STARS
MARKS
High Market
MARKET GROWTH

Low Market If a product is in this quadrant

Share / High
Share / High
Market Growth
the product has a weak
Market Growth market presence. In order to
DOGS make the customer notice this
Low product it will take a lot of
Market CASH COWS work and effort by the
High Market
Share / Share / Low
company. Making profits will
LOW Low Market Growth be difficult since it will not
LOWMarket
MARKET SHARE HIGH get the company economies
WEEK 7 PRODUCT MANAGEMENT
Growth of scale.
 S O M E T O O L S T H AT A R E U S E D I N T H E
A N A LY S I S
UNDERSTANDING THE MATRIX
The BCG Matrix High Market Share / Low
Market Growth- CASH
HIGH COWS
MARKET GROWTH

QUESTION
STARS
MARKS The product in this quadrant is well
High Market
Low Market established and because of its
Share / High
Share / High large sales would be making
Market Growth
Market Growth profit.
CASH COWS The company is in a position to
DOGS consider investing money in its
High Market
Low Market growth or new products or in the
Share / Low
Share / Low company‘s star products. However
LOW Market
Market Growth one has to be careful since the
Growth
LOW MARKET SHARE HIGH market is not expanding
WEEK 7 PRODUCT MANAGEMENT and the
 S O M E T O O L S T H AT A R E U S E D I N T H E
A N A LY S I S
UNDERSTANDING THE MATRIX
The BCG Matrix High Market Share / High
Market Growth- STARS
HIGH In this quadrant the products have
a high share of a market and are
MARKET GROWTH

QUESTION STARS in the growth stage of the market.

MARKS High Market These products need capital to
Low Market Share / High
finance their growth which may
Share / High Market
sometimes mean spending more
Market Growth Growth
than what the immediate returns
DOGS CASH COWS are but have potential for high
Low Market High Market sales and profit. However the
Share / Low Share / Low product is well established with
LOW
Market Growth Market Growth a potential to achieve much more
LOW MARKET SHARE HIGH and the company should make its
WEEK 7 PRODUCT MANAGEMENT
best efforts in order to achieve this.
 S O M E T O O L S T H AT A R E U S E D I N T H E
A N A LY S I S
UNDERSTANDING THE MATRIX
The BCG Matrix Low Market Share / High
Market Growth- QUESTION
HIGH MARKS
Products in this quadrant have a
MARKET GROWTH

QUESTION
low market share in a high
MARKS STARS
growth market.
Low Market High Market
Share / High Share / High These products are opportunities
Market Market Growth which the company can encash.
Growth Since market share is low the
revenue generated is also low but
CASH COWS the possibility is high due to high
DOGS
High Market growth of the market. Hence in
LOW Low Market
Share / Low order to convert these into
Share / Low
LOW MARKET Market HIGH
SHARE quadrant the company needs to
Market Growth WEEK 7 PRODUCT MANAGEMENT
Growth
 EXAMPLE OF A
BCG GROWTH HIGH QUESTION
STARS
MATRIX MARKS
High Market
Low Market

MARKET GROWTH
Share / High
Share / High
There are many companies that we can Market Growth
apply the growth matrix to in the real Market Growth
world. Apple (AAPL) is a great candidate.
Let's take a look at the products Apple IPHONE
APPLE TV
has on the market according to the
matrix categories: DOGS CASH COWS
•Star: iPhone Low Market High Market
•Cash Cow: Macbook Share / Low Share / Low
•Question Mark: Apple TV
Market Growth Market Growth
LOW
•Dog: iPad
IPAD MACBOOK
LOW MARKET SHARE HIGH

WEEK 7 PRODUCT MANAGEMENT

 The Limitations of
the BCG Matrix:
• It assumes that a higher
market share will
SOME TOOLS THAT
ARE USED IN THE necessarily give a
ANALYSIS higher profit.
• The BCG Matrix
oversimplifies the
problem where the
The BCG problem is a set of
Matrix complex decisions. We
should use it as a
planning tool but must
not be overwhelmed
WEEK 7 PRODUCT MANAGEMENT
by its decisions. Some
 • CREATE AN EXAMPLE OF BCG
MATRIX.
• Choose products and make a BCG
MIDTERM matrix.
ASSIGNMENT • Explain the reason why a certain
#1 product is placed in that quadrant.
HIG
H

MARKET GROWTH
QUESTION MARKS STARS
Low Market Share / High Market
High Market Share / High
Criteria Point Value Growth Market Growth
Content 15 points
3 paragraph (5 points/
paragraph) CASH COWS
DOGS
High Market
Low Market Share /
Share / Low Market
Completeness 15 points Low Market Growth
Growth
LOW
Cohesiveness 10 points
LOW MARKET SHARE HIGH
WEEK 7 PRODUCT MANAGEMENT
 SOME TOOLS THAT ARE USED IN
THE ANALYSIS

The BCG The SWOT Ansoffs

Matrix Analysis Matrix

WEEK 7 PRODUCT MANAGEMENT

THE SWOT ANALYSIS
WEEK 7 PRODUCT MANAGEMENT
 WEEK 7 PRODUCT MANAGEMENT

developed by Albert Humphrey

from Stanford University during THE SWOT ANALYSIS
1960 and 1970.

an analytical tool for

auditing a product or
organization and its
environment
S
STRENGTH
O
OPPORTUNITY

the first stage of planning

and helps marketers to
focus on key issues
W
WEAKNESS
T
THREAT

INTERNAL EXTERNAL
FACTORS- FACTORS-
STRENGTHS AND OPPORTUNITIES
SWOT stands for strengths, WEAKNESSES AND THREATS
weaknesses, opportunities, and • those that are within • which the company
threats. the control of the must take into account
organization. but does not have too
much control over.
 WEEK 7 PRODUCT MANAGEMENT

SWOT analysis starts with the

definition of the final objective to
be achieved. It therefore begins at
THE SWOT ANALYSIS
the strategic planning stage.

First, the decision makers Strengths: Weaknesses:

have to determine whether Are Are
the objective is attainable, attributes of attributes of
given the SWOTs. the product the product
that are that are
helpful to harmful to
Identification of SWOTs are essential at the achieving achieving
initial stage because subsequent steps in the the
the process of planning for achievement of
the selected objective may be derived from Opportunitie
objective(s). objective(s).
the SWOTs. s: Are Threats: Are
external external
conditions conditions
S O that are
helpful to
which could
do damage
STRENGTH OPPORTUNITY
achieving to the

WWEAKNESS
T
THREAT
the
objective(s).
objective(s).
 SWOT ANALYSIS

INTERNAL OPPORTUNITY
ANALYSIS THREAT
STRENGTH EXTERNAL
WEAKNESS ANALYSIS
WEEK 7 PRODUCT MANAGEMENT
 SWOT ANALYSIS

INTERNAL The internal analysis is a

comprehensive evaluation of
ANALYSIS the internal environment's
potential strengths and
STRENGTH weaknesses.
Factors should be evaluated across
WEAKNESS the organization in areas such as:

WEEK 7 PRODUCT MANAGEMENT

 SWOT ANALYSIS
Factors should be evaluated across
the organization in areas such as:
INTERNAL Company culture efficiency
Company image Operational
ANALYSIS Organizational
structure
capacity
Brand awareness

STRENGTH Key staff Market share

Access to natural Financial

WEAKNESS resources
Position on the
resources
Exclusive
experience curve contracts
Patents and trade
WEEK 7 PRODUCT MANAGEMENT Operational secrets
 SWOT ANALYSIS

INTERNAL OPPORTUNITY
ANALYSIS THREAT
STRENGTH EXTERNAL
WEAKNESS ANALYSIS
WEEK 7 PRODUCT MANAGEMENT
 SWOT ANALYSIS
External Analysis is an
opportunity is the chance
to introduce a new
OPPORTUNITY
product or service that
can generate superior
THREAT
returns.
Changes in the external EXTERNAL
environment may be
related to: ANALYSIS
WEEK 7 PRODUCT MANAGEMENT
 SWOT ANALYSIS
Changes in the external
environment may be
related to:
Customers OPPORTUNITY
 Competitors
 Market trends
 Suppliers
THREAT
 Partners
 Social changes
 New technology
EXTERNAL
 Economic environment
 Political and regulatory ANALYSIS
environment
WEEK 7 PRODUCT MANAGEMENT
 SWOT ANALYSIS
Changes in the external
environment may be
related to:
Customers OPPORTUNITY
 Competitors
 Market trends
 Suppliers
THREAT
 Partners
 Social changes
 New technology
EXTERNAL
 Economic environment
 Political and regulatory ANALYSIS
environment
WEEK 7 PRODUCT MANAGEMENT
 SOME SIMPLE RULES TO A
SUCCESSFUL SWOT ANALYSIS

Use
Be as SWOT to
Avoid grey Do not
realistic as compare
areas as over
possible competitiv
they tend analyse or
about the e products Remembe
to over
strengths better or r SWOT is
introduce complicat
and worse subjective
subjectivit e the
weakness than our
y. SWOT.
es own
product.
 Strong core brand
Strong market position Concentrated in North
America (US, Canada,
Solid brand portfolio
Mexico), where almost 70%
Strong revenue growth of revenues come from
Economies of scale Health Craze will hurt soft
Cooperative and Progressive drink sales.
Corporate Culture

SWOT
ANALYSIS Acquisitions & alliances
Bottled water growth

FOR PEPSI
Hispanic growth in the US Declining economy/recession
and Pepsi's ability to meet Sluggish growth of
their tastes with current carbonated drinks
product lines (i.e., Sabritas
chips) Coca-Cola & other smaller,
more nimble operators
Growth in emerging markets
Commodity price increases,
Growing consumer health fluctuating oil prices effect
consciousness - i.e., production and distribution
consumer focus on (gas, plastic)
noncarbonated beverages
like Gatorade, Aquafina,
Litpon, Quaker Oats, etc
 SWOT ANALYSIS FOR PEPSI

STRENGTHS WEAKNESSES


 Concentrated in North
Strong core brand
 Strong market position America (US, Canada,
 Solid brand portfolio Mexico), where almost
 Strong revenue growth 70% of revenues come
 Economies of scale from
 Cooperative and Progressive  Health Craze will hurt soft
Corporate Culture
drink sales.
 SWOT ANALYSIS FOR PEPSI

OPPORTUNITIES  Declining THREATS

 Acquisitions & alliances
 Bottled water growth economy/recession
 Hispanic growth in the US and  Sluggish growth of
Pepsi's ability to meet their carbonated drinks
tastes with current product  Coca-Cola & other
lines (i.e., Sabritas chips)
 Growth in emerging markets smaller, more nimble
 Growing consumer health operators
consciousness - i.e., consumer  Commodity price
focus on noncarbonated increases, fluctuating oil
beverages like Gatorade, prices effect production
Aquafina, Litpon, Quaker
and distribution (gas,
Oats, etc
plastic)
 SOME TOOLS THAT ARE USED IN
THE ANALYSIS

The BCG The SWOT Ansoffs

Matrix Analysis Matrix

WEEK 7 PRODUCT MANAGEMENT

ANSOFFS MATRIX
WEEK 7 PRODUCT MANAGEMENT
 ANSOFFS MATRIX The Ansoff Product-Market Growth
Matrix is a marketing tool developed
by Igor Ansoff in 1957.
EXISTING PRODUCTS NEW PRODUCTS
EXISTING MARKETS

This matrix allows Product

Committees to consider ways to
expand their business using
MARKET PRODUCT current and/or new products, in
PENETRATION DEVELOPMENT existing and/or new markets.

This matrix uses a combination

of Product and Market to help
define strategy.
NEW MARKETS

MARKET DIVERSIFICATIO
DEVELOPMENT N This matrix gives us four possible
combinations which help companies
decide what action to take based on
what they are doing at present.
 ANSOFFS MATRIX MARKET
PENETRATION
EXISTING PRODUCTS NEW PRODUCTS Existing Markets, Existing
When companies sell more of its
Products
EXISTING MARKETS

product in the same market it

means that they are penetrating
MARKET PRODUCT the market.
PENETRATION DEVELOPMENT

A penetration strategy will lead to

an increase in the market share of
the product.
NEW MARKETS

MARKET DIVERSIFICATIO This is because additional sale in

DEVELOPMENT N an existing market is likely to come
by taking the competitors share, or
making the company‘s existing
customers buy more of the product
by way of promotion or advertising.
 ANSOFFS MATRIX MARKET
PENETRATION
Market penetration strategy has four main objective
EXISTING PRODUCTS NEW PRODUCTS Existing Markets,
Maintain or increaseExisting
the market
share of current products – this can
Products
EXISTING MARKETS

be achieved by a combination of
competitive pricing strategies,
advertising, sales promotion
MARKET PRODUCT
PENETRATION DEVELOPMENT Ensure that the company remains the
main player in markets that are
growing

In markets that have become mature and are

not growing anymore we reposition the
NEW MARKETS

company‘s product so that the competitor is

not able to sell and the company‘s takes over
MARKET DIVERSIFICATIO its market share.
DEVELOPMENT N
Increase usage by existing customers – for
example by introducing promotional and
loyalty schemes.
 ANSOFFS MATRIX PRODUCT DEVELOPMENT
Existing Markets, New
EXISTING PRODUCTS NEW PRODUCTS Products
EXISTING MARKETS

When a company with a existing

product launches a new product in its
existing market.
MARKET PRODUCT
PENETRATION DEVELOPMENT

These products can be similar to

existing products – eg if Colgate-
Palmolive were to launch a new
flavour of toothpaste.
NEW MARKETS

MARKET DIVERSIFICATIO
The Product Development strategy
DEVELOPMENT N may require the development of new
competencies and also requires the
business to develop modified products
which can appeal to existing markets.
 ANSOFFS MATRIX MARKET DEVELOPMENT
New Markets, Existing
EXISTING PRODUCTS NEW PRODUCTS Products
When a company wants to sell its existing
products in new markets. This strategy can
EXISTING MARKETS

be undertaken in several
The existing product ways:
can be sold in a
completely new geographical markets – in
MARKET PRODUCT another state; country; territory; channel;
etc.
PENETRATION DEVELOPMENT

The same product can be repackaged

or remodeled
NEW MARKETS

It can be made available in Different/

New distribution channels
MARKET DIVERSIFICATIO
DEVELOPMENT N

Different pricing policies to attract different

customers or create new market segments
 ANSOFFS MATRIX DIVERSIFICATION
New Markets, New Products
EXISTING PRODUCTS NEW PRODUCTS
EXISTING MARKETS

In this strategy the

company enters a new
MARKET PRODUCT market with a new product.
PENETRATION DEVELOPMENT

This strategy is the riskiest of

all. In order to undertake this
strategy the company must be
very clear about what its
NEW MARKETS

objectives are and must study

MARKET DIVERSIFICATIO and assess all opportunities
DEVELOPMENT N and risks. Before undertaking
this strategy it must also have
its risk mitigation strategy in
place at the same time of
introduction of new products.
 ANSOFFS MATRIX EXISTING PRODUCTS NEW PRODUCTS

EXISTING MARKETS
The matrix shows us that risk MARKET PRODUCT
PENETRATION DEVELOPMENT
increases the further the strategy
moves away from known
quantities - the existing product
and the existing market.

NEW MARKETS
Thus, product development and
market extension usually involve a MARKET
DIVERSIFICATION
DEVELOPMENT
greater risk than penetration and
diversification generally carries the
greatest risk of all.
MIDTERM Differentiate the 3 tools for analysis in terms
QUIZ #1 of usage & factors.
The BCG Ansoffs Matrix
SWOT Analysis
Matrix
USAGE: USAGE: USAGE:

FACTORS: FACTORS: FACTORS:

CRITERIA POINT VALUE

CONTENT 30 points

BGC Matrix (10 points)

SWOT Analysis (10
points)
Ansoffs Matrix (10
points)
Completeness 10 points
 MIDTERM ACTIVITY #1
Create a group of 2. Criteria Point Value

Content 40 points
Choose a company. SWOT ANALYSIS (20PTS)
ANSOFFS MATRIX (20PTS)
Completeness 20 points
Create an example of SWOT ANALYSIS (10PTS)
ANSOFFS MATRIX (10PTS)
SWOT Analysis & Ansoffs
Cooperation 10 points
Matrix for its company
Creativity 10 points
and product.

Make a presentation.
 PROCESS FOR PRODUCT PORTFOLIO SELECTION

The strategic objective of the product portfolio is to

enhance value creation for the company. In order to have
Product Managers have the
the right portfolio the company must continuously:
primary responsibility of
deciding whether to build,
Identify new market opportunities
maintain, harvest or divest
products. Must have a clear understanding of the markets and competitors in which
the products will be launched and the factors in the market that can have
To do this it requires a clear an impact on the success and failure of the product.
understanding of the The company must also make and evaluation of how much sale and profit
will the product make for it and how the product fits into its business
products capabilities in the objectives.
market vis-a-vis its
competitors, its ability to If the company‘s business objectives are not fully met by the product it
must evaluate and answer how these will be made up.
generate profits, sales in the
short and long run. The company has therefore to work towards setting for itself priorities in
the products it needs to develop to meet its product portfolio objectives.
PROCESS FOR PRODUCT PORTFOLIO SELECTION

Thus in order to manage the product portfolio the company has to start at the first
stage that is
STRATEGIC PLANNING
At this stage it must BALANCE THE PRODUCT PORTFOLIO
evaluate how its new At any time the company will be evaluating and
products will affect its developing new products and each product has a
competitive position. This different need of time and money for
means will the company development. However in order to generate the
stay ahead of completion or right portfolio the company must ensure that it
will it begin go lag or will has the right balance of investment across:
this new product add a new a. Products, technologies and markets (new and
market which the company existing)
is already strong or will it b. Customer segments and regions
take it to new unchartered c. Innovation Level, Project Stage, Timing and
markets. Risk
 PROCESS FOR PRODUCT PORTFOLIO SELECTION

Thus in order to manage the product portfolio the company has to start at the first
stage that is SHARING OF
FOCUS ON RESEARCH INFORMATION ACROSS
AND DEVELOPMENT CONTINUOUS EVALUATION OF THE COMPANY
The company must NEW PRODUCT DEVELOPMENT
ensure that the Every new product being developed In order to speed up
necessary Research and must be evaluated at each stage of product development
development for them consumed,
Development activities we must ensure that
costs incurred, and ability to meet
needed for business and financial goals. mistakes are not
development of their Products that do not neet the repeated and good
products has clear necessary requirements must be
objectives so that the
practices are duplicated
rejected even though the company
necessary may have spent some resources on across the company.
developments are ready it. This will ensure that only the best Hence knowledge of
on time for product products are finally completed and product development
it also ensures that the company
development. must be shared across
does not keep spending money on
PRODUCT
PRICING
WHAT IS PRICING?
 WHAT IS PRICING?

Pricing is the Pricing takes

process of into
consideration
determining the
manufacturing
value that the cost, market
company will place,
receive for the competition,
product in such a market
manner that it condition, and
will meet the quality of
company‘s product.
business
objectives.
WHAT IS PRICING?
 WHAT IS PRICING?

A well chosen price should do

three things:
Price is the
only revenue  Help in achieving the
company‘s business
generating objectives in terms of
element profitability.
amongst the  It should be such that the
consumer will buy the
four Ps, the product in relation to other
rest being cost products in the market
centers. place.
 It should be consistent with
its positioning and
marketing variables.
WHAT IS PRICING?
 WHAT IS PRICING?

STRATEGIC PRICING

is the effective, proactive

use of product pricing to
drive sales and profits,
and to help establish the
parameters for product
development. It is
powerful tool for
successful marketing
strategies if used
judiciously.
KEY ELEMENTS OF
PRICING STRATEGY
 KEY ELEMENTS OF PRICING
STRATEGY

This way the Product

Manager can get an
UNDERSTAND insight into what will be
PRICING the development costs,
BEFORE understand how much he
COMMENCING will need to spend on
DEVELOPMEN
T
advertising, what will be
the manufacturing costs
and in return what price he
can expect thus what
profit he will make.
 KEY ELEMENTS OF PRICING
STRATEGY

In order to arrive at
product costs we should
not rely on historical COSTS
costing. Today‘s actual
costs and the possible
future costs must be
taken for costing and
creating a pricing
 KEY ELEMENTS OF PRICING
STRATEGY

We must be aware
what the competition is
COMPETITIO doing in terms of
N pricing. This must be
factored into our
strategy but we must
be careful not to copy
 KEY ELEMENTS OF PRICING
STRATEGY

We must be aware of the

price sensitivity of our
product since the shift of
buyers to other products PRICE
is dependent on this SENSITIVITY
factor. We must
understand what are the
factors that influence this
sensitivity and control
 KEY ELEMENTS OF PRICING
STRATEGY

As the product moves from

growth to decline the price of
the product usually goes down
because by this time
competition has similar
PRODUCT products and consumers have
LIFECYCLE understood the product and
the competitors‘ product and
can now truly value the
differences. Thus large
perceived differences in prices
PRODUCT PRICING
 PRODUCT PRICING

The ideal price for any product or service is

one that is acceptable to both buyer and seller.
From the buyer's point of view the right price
depends on the buyer‘s perceived value of the
product and what competitive products are
available in the market.
The seller has several objectives in pricing the
product. However the main objective is to
ensure growth in sales and profits.
 PRODUCT PRICING
The following steps can be used for
determination of product pricing for any size
business:
Analyze Size
Analyzing Evaluate the
and
Your Costs Product's
Composition
and Uniqueness
of Target
Overhead
Market

Understand Select the Stage in Estimating

Product Distribution Product Life Sales at
Price Channels Cycles Different
Elasticity Prices
 PRODUCT PRICING
The following steps can be used for determination of product
pricing for any size business:
 we need to estimate the potential for the
product in the target market segment.
 need to understand how big the market for
the product is and see if this is a growing,
stagnant or receding market.
 The competitor‘s strengths weaknesses as Analyze Size
company must be evaluated and specific and
importance must be laid on the specific Composition
product against which the product is to be of Target
positioned in order to find a way to position/
price our product.
Market
 This type of information is gathered from the
 PRODUCT PRICING
The following steps can be used for determination of product
pricing for any size business:
The most basic part of pricing is to have the correct costs and
overheads. Overheads are costs that are not directly
associated with the production cost of the product.

Historic costs are costs that the company may have incurred
on a similar process or component in the past.
Analyzing
Your Costs Several objectives need to be addressed in determining
and correct product pricing:
• It must be competitive.
Overhead • It should cover the cost of producing the goods or services.
• It must cater for marketing and overhead expenses.
• It must meet the profit objectives set at the time of
planning.
• It should be able to cater to distribution margins and
discounts.
 PRODUCT PRICING
The following steps can be used for determination of product
pricing for any size business:

The more our product resembles the

competitors product the lesser will be
the difference in price.
The product manager must ensure
that the difference he creates
between his product and the
competitors product must not only be
Evaluate
recognizable by the buyer but they the
must also put a value for this Product's
difference.
Uniquenes
s
 PRODUCT PRICING
The following steps can be used for determination of product
pricing for any size business:
The more our product resembles the competitors product the lesser
will be the difference in price.
The product manager must ensure that the difference he creates
between his product and the competitors product must not only be
recognizable by the buyer but they must also put a value for this
difference.

Let us take the example of bathing soap –

if a consumer walks into a store and does
not find the brand of his choice he is Evaluate
likely to take another soap of another brand
without much Another
thinking.example is that of gourmet food products
the
which have many distinct and unique attributes in any Product's
given category.
Consumers shop for gourmet products because Uniquenes
they are usually looking for new, unique
products — "something out of the ordinary."
s
 PRODUCT PRICING
The following steps can be used for determination of product
pricing for any size business:
ELASTIC
If demand for the product or
Understa service changes significantly with
nd slight changes in price, the product
category is considered to be
Product elastic with respect to price.
Price
Elasticity INELASTIC
If no significant volume changes
occur, even with significant price
 PRODUCT PRICING
The following steps can be used for determination of product
pricing for any size business:
What does price elasticity
mean for product pricing?
Understa
nd The greater the price elasticity,
the closer you should price your
Product products to similar competitive
Price products and vice versa. While the
Elasticity product may be unique,
consumers will not pay much of a
premium for it if there are similar
 PRODUCT PRICING
The following steps can be used for determination of product
pricing for any size business:
ELASTIC
If demand for the product or
Understa service changes significantly with
nd slight changes in price, the product
category is considered to be
Product elastic with respect to price.
Price
Elasticity INELASTIC
If no significant volume changes
occur, even with significant price
 PRODUCT PRICING
The following steps can be used for determination of product
pricing for any size business:
Distribution channels are a cost
for the product however this
channel can also be a great
strength. Select the
Distributi
Distribution channels allow a
company to quickly get access on
to several buyers in a market or Channels
to several different markets.
 PRODUCT PRICING
The following steps can be used for determination of product
pricing for any size business:
The distribution channel has
two types of costs which one
must be aware of:
The primary cost:
this is the cost incurred in handling, Select the
transporting Distributi
the product from the manufacturing unit on
to the wholesaler or the distributor.
Channels
 PRODUCT PRICING
The following steps can be used for determination of product
pricing for any size business:
The distribution channel has
two types of costs which one
must be aware of:
The secondary cost:
this is the cost of margins that the company has Select the
to build into the selling price of the product for Distributi
the distributor and the retailer.
on
The secondary costs vary from industry to industry and the Channels
product manager must be aware of the industry practices while
pricing his product.

The secondary margins are calculated as a ―mark-up or

 PRODUCT PRICING
The following steps can be used for determination of product
pricing for any size business:
The distribution channel has
two types of costs which one
must be aware of:
The secondary cost:
The secondary margins are calculated as a ―mark-up or Select the
markdown on the selling price.
Distributi
o Mark-up means that the margin is added to the selling price
or cost. on
o Markdown means that the margin is a percentage of the
selling price.
Channels

Markups, like all pricing strategies, depend on three influences

— cost, competition, and demand.
 PRODUCT PRICING
The following steps can be used for determination of product
pricing for any size business:
The distribution channel has
two types of costs which one
mustselecting
While be aware of:
a distribution channel the company must
ensure that
i. It has the lowest costs possible
Select the
ii. It must allow the product to enter the market easily Distributi
despite competition
iii. The distribution channel must be able to provide on
adequate sales volume to meet company‘s Channels
objectives
iv. The company makes a sufficient margins after
paying costs of the distribution channel.
v. The channel is committed to the company‘s product
 PRODUCT PRICING
The following steps can be used for determination of product
pricing for any size business:

With increased competition and desire

of companies to stay ahead of
competition the product life cycles are
Stage changing.
in
Product Companies like to introduce new
products or new features very quickly.
Life Because of this the companies have to
Cycles adjust their pricing strategies along
 PRODUCT PRICING
The following steps can be used for determination of product
pricing for any size business:
Before finalizing the price of the product we need to make
a final analysis on how much sales the company is likely to
achieve. This must be analyzed at several price points and
then matched with the company‘s objectives. This price
must help objectives like: Estimati
• Meet the profit objectives ng
• Cover cost of goods and overheads Sales at
• Allow adequate marketing spending to Differen
promote the product t Prices
• Pay for sales commissions and distributor
markups
• Transportation costs to distributors
TYPES OF PRICING
 TYPES OF
PRICING

LOSS PREMIUM
LEADER PRICING

PROMOTIONA
L PRICING
 TYPES OF
LOSS
LEADER
PRICING

A loss leader is a product that has a price set below the

operating margin - not necessarily below cost.

This results in a loss to the enterprise on that particular item in

the hope that it will draw more customers and that some of
those customers will buy other, higher margin items.
An example is a retailer may sell bread or eggs at a very low price and so
customers who come to buy eggs and bread will also buy their other
requirements. This will help the retailer make up the loss and enhance sales
of his outlet.
 TYPES OF
LOSS
LEADER
PRICING
 PREMIUM TYPES OF
PRICING
PRICING

Premium pricing is the strategy of consistently pricing

at, or near, the high end of the possible price range to
help attract status-conscious consumers.

Examples of companies which partake in premium

pricing in the marketplace include Tanishq, BMW,
Cross pens and Bentley.
PREMIUM TYPES OF
PRICING
PRICING
 PREMIUM TYPES OF
PRICING
PRICING
Premium pricing is the strategy of consistently pricing
at, or near, the high end of the possible price range to
help attract status-conscious consumers.

Examples of companies which partake in premium

pricing in the marketplace include Tanishq, BMW, Cross
pens and Bentley.
People will buy a premium priced product because:

a. They believe the high price is an indication of good quality;

b. They believe it to be a sign of self worth - "They are worth it;" it authenticates the
buyer's success and status; it is a signal to others that the owner is a member of an
exclusive group;
c. They require flawless performance in this application - The cost of product malfunction
is too high to buy anything but the best - example : heart pacemaker.
 PROMOTIONAL TYPES OF
PRICING
PRICING
Promotional pricing is only temporary in nature and
always downwards.
Promotional pricing therefore refers to a temporary
reduction of prices in order to simulate product
demand. However marketers should be careful not to
overuse promotional programs that temporarily
reduce
The selling price.
options for
SALES BUNDLE
promotional pricing MARKDOWNS
PROMOTIONS PRICING
include:
 PROMOTIONAL TYPES OF
PRICING
PRICING
The options for
promotional pricing
MARKDOWNS
include:

This is the most common method of promotional pricing used for stimulating
customer demand. There are three types of markdowns:

Temporary Markdown- for a specified period of

time
Seasonal Markdown- for specified periods of the year e.g. festivals, end of
season, special events
Permanent Markdown- the prices are permanently reduced
 PROMOTIONAL TYPES OF
PRICING
PRICING
The options for
promotional pricing
MARKDOWNS
include:

This is the most common method of promotional pricing used for stimulating
customer demand. There are three types of markdowns:

Temporary Markdown- for a specified period of

time
Seasonal Markdown- for specified periods of the year e.g. festivals, end of
season, special events
Permanent Markdown- the prices are permanently reduced
 PROMOTIONAL TYPES OF
PRICING
PRICING
The options for
promotional pricing
MARKDOWNS
include:

This is the most common method of promotional pricing used for stimulating
customer demand. There are three types of markdowns:

Temporary Markdown- for a specified period of

time
Seasonal Markdown- for specified periods of the year e.g. festivals, end of
season, special events
Permanent Markdown- the prices are permanently reduced
 PROMOTIONAL TYPES OF
PRICING
PRICING
The options for SALES PROMOTIONS
promotional pricing
include:

these are several types of promotions

possible to promote sales.

This could be in the form of a consumer

scheme, discounts, coupons, trade-in,
loyalty programs, etc.
 PROMOTIONAL TYPES OF
PRICING
PRICING
The options for SALES PROMOTIONS
promotional pricing
include:

these are several types of promotions

possible to promote sales.

This could be in the form of a consumer

scheme, discounts, coupons, trade-in,
loyalty programs, etc.
 PROMOTIONAL TYPES OF
PRICING
PRICING
The options for
promotional pricing BUNDLE PRICING
include:

This type of pricing is done when the marketer does not want to reduce the
price of its product but yet wants to promote it. A customer sees the reduction
in price as a reduction in quality.

And so bundling it with another product helps create the perception that the
overall cost of both the products is reduces without creating the impression
that one products price has been reduced.
 PROMOTIONAL TYPES OF
PRICING
PRICING
The options for
promotional pricing BUNDLE PRICING
include:

This type of pricing is done when the marketer does not want to reduce the
price of its product but yet wants to promote it. A customer sees the reduction
in price as a reduction in quality.

And so bundling it with another product helps create the perception that the
overall cost of both the products is reduces without creating the impression
that one products price has been reduced.
THANK YOU FOR LISTENING!