Product management - elements and strategies

Service Business

In many companies, the position of "product manager" still sounds strange. This is the mistake of companies wishing to be competitive. Effective product management allows them to develop and keep up with the needs of consumers.

What is product management?

Product management is about designing, implementing and managing product lifecycles. Product management combines the possibilities offered by new technologies with the needs and expectations of customers. Thus, the person responsible for this process must be perfectly familiar with technologies and skillfully combine innovative solutions with the needs of consumers.

What is the purpose of shaping the product?

The purpose of shaping the product is to adapt it to the requirements of the selected target group, i.e. to personalize it. Product management is based on shaping it and it is one of the key elements of this process. It should be noted here that it consists of three levels - we distinguish:

  1. The core of the product is its physical form, describing this level, we focus on the basic functions of the product.
    Example: The core of a mobile phone is the ability to communicate with loved ones "remotely".
  2. Real product - it is made up of functions and features that make up the entire product and meet customer expectations.
    Example: Consumers expect that their mobile phone will allow them to take pictures, send SMS,
    and will also have a large touch screen.
  3. Extended product - defines additional benefits of purchasing the product.
    Example: For a mobile phone, an extension may be offering a replacement phone in the event of a warranty return, or a camera taking 4k photos.

Understanding the complexity of your product allows you to take full advantage of your product shaping strategy.

Shaping a product begins when its idea is developed and ends when it is withdrawn from the market. It consists of the following elements:

  • Defining product functions (at this stage, we design the core of the product and plan the actual level of the product);

  • Defining the scope of the extended product (at this stage, we define the quality of the product, forms of after-sales service - including the guarantee, packaging and added values ​​that are brought by the choice of our offer);

  • Assortment structure (here we choose whether our product will have other variants, e.g. sizes, colors, versions with other functions);

  • Creating new needs - in connection with the dynamically developing technologies and lifestyle, the product we offer may meet the needs that are not yet realized by customers, and the role of marketing specialists in the company is to define these needs and then instill them in the minds of customers.

Planning and implementing a product strategy should take into account the company's capabilities, market situations and, above all, customer needs. It is the last aspect that should determine the shaping of an individual product and affect product management.

Product offer - which strategy to choose?

After developing a product shaping strategy, it is time to plan your product offer. Firms may decide to:

  • Full range - i.e. the company offers a product and a full range of complementary products.
    Example: The main product of the company are mobile phones, but the company also sells: headphones, chargers, external memory, batteries, cases, pendants.

  • Limited assortment - the company offers the product only to a narrow, clearly defined target group.
    Example: The company's product is a subscription which is dedicated only to large companies.

  • Competitive offer - the point of reference in creating an offer is to analyze the activities of the competition and create a competitive offer, preferably exceeding the offer of the competition.

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Product life cycle - how to plan it?

The growing needs and expectations of customers require companies to constantly improve their offers and develop new services and products. Currently, the end of the sale is not synonymous with a crisis for the company, it is a natural stage. New products replace old ones, which is particularly visible in enterprises where we observe dynamic development of technology. For this reason, we can talk about the product life cycle, i.e. the period in which the product has buyers. Product management is based on the product life cycle, as it determines the level of sales and is an important element of the strategy.

The product life cycle is divided into the following stages:

  1. Introduction, also known as the birth of a product - this is the stage at which the product is only just entering the market. The main marketing goal in this period is product positioning;
  2. Increase in sales - the key goal of this stage is to maximize market share, which will allow for a return on investment in the future;
  3. Market maturity - this period assumes staying on the market while reducing the costs of marketing activities;
  4. Decline in sales (called product obsolescence) - This is where the financial investment in the product ends.

The product life cycle determines the marketing activities that differ at each stage.

Creation and development of new products

Introducing new products is a real challenge for the company, but also an opportunity for huge development. In order for our product to turn out to be a success, and not a financial disaster, we should introduce it based on a thoroughly developed and implemented new product development procedure, which includes:

  1. Idea;
  2. Design and construction and technical stage;
  3. Market analysis (taking into account the needs and demand, as well as the activities of the competition), supported by marketing research;
  4. Financial aspects (investment cost, also estimated return on it);
  5. Testing phase;
  6. Product launch for sale.

At the beginning, however, the most important thing is the idea. It is worth being aware that not every innovative product is completely new. New products can be created on the basis of absolute innovations (this option assumes inventing a previously non-existent product or service) or secondary innovations (which are based on modifications of already existing products). Most companies introduce novelties that are secondarily innovative.

We distinguish the following strategies for introducing new products to the market:

  1. The new generation is the improvement of known products by means of new technologies.
    Example: The new generation X mobile phone is lighter, thinner and performs faster when using multiple applications simultaneously.
  2. Marketing distinction - includes changes that do not require interference with the product technology.
    Example: X juices, previously sold in glass bottles, have been re-introduced to the market in more convenient plastic packaging.
  3. Segmentation of a differentiated product - consists in offering different variants of the same product to satisfy the needs of a selected market segment.
    Example: X bikes are sold for children and adults.
  4. Horizontal product diversification: a company offering one product to a selected target group introduces another (different), but corresponding to a given target group.
    Example: XYZ offers its target group hair conditioners and shampoos, and then introduces another product: body lotions.
  5. Modification - involves introducing improvements to existing products.
    Example: Varnish X has been modernized and dries just 2 seconds after application (previously it dried in 10 seconds).
  6. Imitation - introducing an equivalent of an existing product, but e.g. cheaper or made of other materials.

Another division of the product development strategy is distinguished by:

  1. Designing and introducing a completely new product to the market;
  2. Modernization of already existing products;
  3. Introducing famous products that have new features;
  4. Adaptation of existing products to the needs of consumers;

Regardless of which product development strategy we choose, it should respond to the needs of the market, consumer expectations, and also take into account competition. Product management allows you to avoid misguided investments and develop a product adapted to a difficult, competitive market.