Managing Products Tutorial

In the Product Decisions Tutorial, we showed that marketers are confronted with many issues when building the product component of their marketing strategy. While product decisions represent just one aspect of marketer’s overall activities, these decisions are often the most important because they lead directly to the reasons (i.e., benefits offered, solutions to problems) why the customer decides to choose the organization’s goods, services, or ideas. Consequently, it is often the marketing decision that consumes the most time for marketers and for their organization.

In this part of our Principles of Marketing Tutorials, we extend the coverage of product decisions by exploring additional product issues facing the marketer. In particular, we examine four important areas. First, we categorize the roles played by those involved in product management and show how the scope of a manager’s responsibilities changes as these roles take on greater importance. Second, we return to a discussion of branding by focusing on overall branding strategies that may be adopted by the marketing organization. Third, we spend a large part of this tutorial covering the importance of new product development including an analysis of the steps organizations may follow to bring new products to market. Finally, we will see that once new products have been established in the market numerous factors force the marketer to continually adjust their product decisions.

Levels of Product Management

Product management can be separated into four different levels with the responsibilities increasing with each level.

Product Item Level

At this level, responsibilities are associated with marketing a single product or brand. By “single” we are limiting the marketer’s responsibility to one item. For instance, a startup software development company may initially market just one product. In some organizations, the person in charge has the title Product Manager, though in smaller companies this person may simply be the Marketing Manager.

Brand Product Line Level

At this level responsibilities are associated with managing two or more similar product items. By “similar” we are referring to products carrying the same brand name that fit within the same product category and offer similar solutions to customers’ needs. Procter & Gamble, one of the largest consumer products companies in the world, markets Tide laundry detergent in many different packaging sizes (e.g., 50oz., 100oz., 150oz.), in different forms (e.g., regular powder, concentrated powder packs, high efficiency liquid), and with different added features (e.g., softener, bleach, freshener) resulting in a product line consisting of over 70 different versions of the product. Differences in the product offerings indicate these are targeted to different segments within the larger market (e.g., those preferring liquid vs. those preferring powder packs), however, it may also represent a choice for the same target market who may seek variety. A product line is often measured by its depth, relative to competitors, with deep product lines offering extensive product items. Brand product lines are often managed by a Brand or Product Line Manager.

Category Product Line Level

At this level, responsibilities are associated with managing two or more brand product lines within the same product category. In this situation, the marketer may manage products that offer similar basic benefits (e.g., detergent to clean clothes) but target their offerings to slightly different needs (e.g., products for tough to clean clothing vs. products to clean delicate clothing). Multiple brand product lines allow the marketer to cover the needs of more segments and, consequently, increases its chance of generating sales. Often in larger companies, category product lines are the responsibility of the Product Category or Divisional Marketing Manager, who may have Brand Product Managers reporting to her/him.

Product Mix Level

At this level, responsibilities include two or more category product lines that are directed to different product categories. In some cases, the category product lines may yield similar general solutions (e.g., cleaning) but are aimed at entirely different target markets (e.g., cleaning dishes vs. cleaning automobiles). In large companies, the product lines are very diverse and offer different solutions. For example, BIC sells writing instruments, shaving products, and gas lighters. This diversification strategy cushions against an “all-eggs-in-one-basket” risk that may come if a company directs all resources to a single product category. A product mix can be classified based on its width (how many different category product lines) and its depth (how many different brand product lines within a category product line). Generally responsibility for this level belongs to a company’s Vice President for Marketing.