Product management is a unique function [6]. It is an important area in marketing because it paves the way for sustainable product performance and profitability for companies. Bjernulf and Billgren define product management as “the task that consist of product planning (making sure that the right product is offered), product marketing (enabling the product to reach its potential market), product strategy (the guide for product value delivery over the life cycle), and creating insights (understanding legacy, ecosystems/markets and driving forces)” [8]. Haines and Ausura also define it as a strategic and tactical management of products which are already in the market [6]. In addition, Windley sees product management as the process of designing, building, operating, and maintaining a good or service [9]. From these definitions, it can be clearly seen that product management is all about conceiving, developing, maintaining, and controlling the product sustainably over its life cycle. It deals with deciding on what the product will be and ensuring that it remains like that in the market profitably. Thus, an effective and high performing product management in a nutshell, enables companies to sell what is developed and develop what they can sell.
Similarly, product management can be seen as the act of effective customer life cycle Management. According to Windley, “customer life cycle consists of two phases; customer buying the product and customer using the product,” [9]. Here, it is important to add the third stage, which is the decision to discard the product by the same customer. But in product management, companies are always trying to avoid the third stage because it leads to product decline or death in the market. In general, there are two methods of managing a product; the product life cycle and individual product management strategies.
Perhaps a more comprehensive definition of product lifecycle management is the one offered by Razvan Udroiu who views it as “a business strategy for managing the entire lifecycle of products. This strategy includes the management of conception, design, design validation and simulation, prototyping, manufacturing, quality control, use, maintenance and disposal of products, having integrated people, methods, CAx tools, processes, documentation, and data management solutions” [10]. The import of this definition is that product life cycle management can be seen from two different angles; traditional and modern perspectives. The traditional product life cycle management is very conservative and outdated. There is no innovation and creativity in it but rather a dormant, rigid, and stone-age orientation. Traditional farming system, local textiles, blacksmith, cobblers, and pottery especially in some African countries fall in this category. There is no modification or addition of new features but a religious utilization and protection of the past.
The modern perspectives on the other hand deals with the use of modern technology to produce and manage products overtime. There is creativity, innovation, and frequent modifications here which, in turn, lead to the development of many products variants and even new inventions. The application of computer-aided designs (CAD), robotics, drones, internet facilities, and other digital devices fall into this category. The design, manufacture, use and management of airlines services are examples of modern product life cycle management. To remain competitive and relevant in today’s market, a company has to adopt the modern perspective of product life cycle management.
3.1. Product life cycle management strategies
The key focus here is to successfully and proactively manage products throughout their lifetime, by applying the appropriate resources and sales and marketing strategies, depending on which stage a product is in the cycle.
3.1.1. Strategies in the introductory stage
The nature and characteristics of the introductory stage have been discussed earlier in this chapter. Therefore, the main challenge in this stage is that when a new product is launched, there is typically small market which translates into low sales. There is high cost associated with research and development, marketing, and promotion. These costs notwithstanding, most companies will see negative profits in this stage with limited competition especially if the product is entirely new in the market.
A company can adopt any of the four product introduction strategies; rapid skimming strategy using high promotion with higher initial price, rapid penetration strategy (involving high promotion with low price), slow penetration strategy (using low promotion with associated lower price), and slow skimming strategy (involving low promotion with higher initial price). Each of these strategies is built upon the objectives of the company of either market penetration or market skimming, i.e., higher profit. This, in turn, depends on how price sensitive the market is. In any case, it is always better to adopt penetration strategy in order to encourage more product adoption which produces higher sales volume.
3.1.2. Growth stage strategies
At this stage, brand managers have to effectively manage the challenge of increased competition as new manufacturers seek to benefit from a new, developing market, and its resultant effects. In response to the growing number of competitors that are likely to enter the market during the growth phase, manufacturers tend to lower their prices in order to achieve the desired increase in sales. Marketers should also change the focus of their promotion from product awareness to brand preference which will help to increase the size of the market and sharp increase in sales.
3.1.3. Strategies in the maturity stage
In product management, this stage can be quite challenging and difficult to manage for manufacturers. In the first two stages, companies try to establish a market and then grow sales to achieve increased market share. However, during the maturity stage, the primary focus for most companies will be maintaining their market share amidst many challenges such as market saturation, decreasing market share, and profits caused by stiff competition.
While the market may reach saturation during the maturity stage, manufacturers might be able to grow their market share and increase profits in other ways. Kotler and Keller opine that market, product and marketing modification are the three broad strategies that can be used to manage products in the maturity stage [2]. Market modification calls for expanding the existing market by getting more users for the product, developing new uses for the product and promoting more usage for the product. For example, for Unilever to encourage buyers of its Close-up toothpaste to use it three times after every meal. This will increase the usage rate and need for replacement. Product features modification involves quality, features and style improvements, and other innovative marketing campaigns to improve market share through differentiation. In the same vein, marketing program on pricing, distribution, advertising, sales promotion, and services can be modified to further stimulate sales and market share for the product. Thus, the main goal here is companies to develop innovative ways to make their product more appealing to the consumer that will maintain, and perhaps even increase, their market share.
3.1.4. Decline stage strategies
The key focus here is to be able to harvest the declining product by offering cheaper products, selling to the laggards’ market segment that is the last to adopt an innovation. Firms can also offer discounts and other promotional activities to increase sales in the short run. In the long run, a company can think of entering a new market with the existing product, product modification or even selling the product in foreign market thereby starting a new life cycle entirely. However, poorly managed product cannot withstand the harsh conditions of this stage which gives organization no option other than to phase the affected product out of the market. To do this, a company should establish a product review committee consisting of members from marketing, finance, engineering, production, and research and development to study the performance of a declining product [11]. After the review, the team can then recommend a product or products that can be built through re-investment, those to harvest, hold, or divest from the portfolio. Therefore, decision on phasing out a product should not be taken haphazardly in a rush; rather, it should be based on an informed decision. Consequently, the product life cycle curve needs to be applied with a certain amount of care, even though it is still a useful model which provides businesses and their marketing departments with the opportunity to plan ahead and be better prepared to meet those future challenges.
3.2. Product mix and product-line analysis
It is equally important for companies to appreciate the significance of product mix and product line in the product management discourse. This is because of the relevance of the two concepts in determining the level and complexity of managing a product portfolio. A product mix is the set of all products and items a particular company offers for sale. It is the total product portfolio that a company manages. While a product line is a group of closely related products that are considered a unit because of marketing, technical, or end-use considerations. In other words, a product line consists of a set of brands that are closely related due to the similar functions they perform, they are sold to the same customer groups, use the same channel of distribution or fall within the same price range [4]. For instance, a personal computer is one product line. An example of a product mix and product line width, length, depth, and consistency for Jaiz Bank Nigeria is depicted in Table 1.
Retail bankingCorporate bankinge-BusinessPrivate bankingJaiz saving acctJaiz Corporate Acct.Jaiz OnlineJaiz PremiumJaiz current acctCorporate savingJaiz MobileInvestment AcctJaiz salary acctDomiciliary AcctPoint of Sales (POS)Jaiz Kids acctWorking Capital acctJaiz payJaiz Tier one acctProject FinancingSMS BankingJaiz Tier two acctReal Estate FinancingJaiz just Top-upPersonal FinanceService LeaseVerve cardsRental FinanceImport FinanceMaster cardsMedical FinanceExport FinanceEducation FinanceJaiz Travel Finance
A company’s product mix has a certain width, depth, and consistency. The width of a product mix refers to how many different product lines the company carries. In the table, Jaiz Bank has four lines of services. Product mix depth is the total number of product items under each line. In Table 1, the depth of retail banking line is 11 different services. While the consistency is the degree to which all the products in the mix are related in one or the other. This may be in terms of the market being served, distribution channel used, or common production processes. All the services of Jaiz Bank are consistent in their banking focus. Companies normally develop a basic platform and modules that can be added to meet different customer requirements. This modular approach enables the company to offer variety while lowering production costs.
3.3. Product differentiation
Successful product management cannot be achieved without product differentiation which is a process of designing and formulating unique and meaningful features that provides an identity around company’s products. Differentiation can be built around goods or services such as automobiles, furniture, designer shoes, bags, and healthcare services. The aim is to make the target market identify and recognize the difference. If the market perceives no difference between two competing products, then the only possible means of competition is through pricing. In a situation such as this, products are viewed by customers as very easy substitutes for one another.
Products can be differentiated through many different ways. This differentiation may for example take the form of different packaging, marketing and product features, performance, conformance, durability, reliability, reparability, style, and design [2]. As long as a business can come up with a creative way to differentiate its product or service, gaining a competitive advantage is possible.
3.4. Other product management strategies
Apart from the life cycle product management strategies, companies also have an array of specific product strategies to use in managing their product assortments. These, products include, among others, the following:
Limited versus full-line product strategy
Line filling strategy
Line stretching strategy
Line modernization
Line Featuring
Line pruning
Brand extension strategy
Product repositioning strategy
Planned product obsolescence
Product deletion strategy
Limited versus full-line strategy: As the name implies, this strategy simply deals with a company’s decision to carry few or many product lines in its portfolio. Small scale enterprises (SMEs) and micro enterprises, for example, manage few products or even one product item based on their size. Companies like Procter and Gamble, Unilever, and Dangote Group carry many product lines and product assortments which make it very complex to manage than just few line or brands. However, it should be noted that companies should not put their eggs in one basket by offering one brand or few lines; rather, they should spread their risks by expanding their product lines.
Line filling: Line filling means adding products to fill a gap in the existing line. It is the process of lengthening the product mix by adding more items within the present range. Reasons for line filling may include getting incremental profits, maintaining dealers who complain about lost sales because of missing items in the line, utilizing excess capacity, becoming a leading full-line company and to keep competitors away. To achieve this, a company can introduce flanker products to protect the main brand from competitors. For example, Nestle Foods Nigeria Plc. has introduced different flavors of Maggi to give protection to Maggi star brand like Maggi chicken, Maggi crayfish, Maggi beef, Maggi pepper soup, etc. However, care should be taken not to introduce a product that will kill or cannibalize the existing product. Charles Schewe argues that the introduction of Classic Coke has cannibalized the sales of regular Coke [13].
Line stretching: This occurs when a company lengthens its product line beyond its current range. This is a frequent measure taken by companies to enter new price slots and to cater for new market segments. The product may be stretched by the addition of new models, sizes, variants, etc. For example, Toyota car comes in different models and brand names such as Carina, Corolla, Camry, Yaris, Prius, and Mirai in order to serve different customer segments. A company can choose to trade up or trade down. Trading up is a situation in which a company known for marketing low priced product will add a high quality brand sold at higher price. For example, Volkswagen traded up from Beetle to Arteon model to serve the upper class. Trading down, on the other hand, is a strategy by which a company that is positioned in the upper market may decide to introduce a lower price line. A company can adopt this strategy to exploit strong growth opportunities in the lower market segment, tie-up lower-end competitors so that they do not move up-market or move out of a stagnating market.
Line modernization: Product lines need to be modernized continuously. Companies plan improvements to encourage customer migration to higher-valued, higher-priced items. For instance, Microsoft has upgraded its Windows operating system from Windows 7 to Windows 8, XP, Vista, and Windows 10.
Line featuring: The product-line manager selects one or few items in the line to feature. Sometimes, a company finds one end of its line selling well and the other end selling poorly. Then, the company may try to boost demand for the low-selling ones that are threatened with extinction due to lack of demand.
Line pruning: This is otherwise called line reduction. At times a company finds that over the years it has introduced many variants of a product in the product line probably because of the changing market situations which makes the product lines become unduly complicated with too many variants. So, when the products are not satisfactorily performing, the product managers need to drop them from the product line. This may lead to increased profitability due to cost reduction from promotion and other marketing expenses. Thus, line pruning is a well thought-out decision by the product manager to drop some product variants from the line.
Product repositioning strategy: First, positioning is the process of placing the product’s functionality, relevance, or attributes in the minds of customers. Positioning helps to create a unique perception about a product in the minds of consumers such that a mere mentioning of that brand will evoke an association of quality or otherwise on the product. For example, Mercedes brand evokes good manufacture, McDonald’s means quality fast food and snacks, and Singapore Airlines means responsive and reliable airline services. Therefore, a company may decide to reposition its products in order to serve another market segment thereby extending the product’s life cycle. For example, Cadbury Nigeria Plc. initially positioned its Bournvita brand as food drink for future sporting champions. But today, it is repositioned as a food drink for child nourishment in their advert slogan “every child deserves nourishment, every child deserves Bournvita.” So, repositioning is used in order to add value to the brand to enhance its marketability.
Brand extension strategy: Brand extension or brand stretching is a marketing strategy in which a firm marketing a product with a well-developed image uses the same brand name in a different product category [4]. Companies use this strategy to increase and leverage brand equity (which is the net worth and long-term value of the original brand name) to market a new business or product to a new customer market. An example of a brand extension is PZ’s Venus brand which is used to create Venus Soap, Cream, lotion, powder, and hair relaxer. It increases awareness of the brand name and increases profitability from offerings in more than one product category. Another example is Dangote brand which is extended to Dangote cement, Dangote sugar, Dangote salt, Dangote flour, and Dangote transport.
Product standardization versus customization in global market: Customized and standardized marketing strategies are two opposing product management options in international marketing operation. In recent years, there has been an increased urge among local organizations to diversify their operations in the international market to enhance their revenues, competitiveness and global market share. This makes it essential for organizations to adopt international marketing strategies to guard them against foreign competition. Customization strategy is based upon the polycentric orientation of international marketing operation. This ideology holds that due to cultural and other differences among countries, marketing strategies should be tailor made for each country. This strategy is influenced by the differences in buyer behavior characteristics, socio-economic condition, and competitive environment.
Standardization, on the other hand, is a complete contrast to the customized strategy by which a standard product is produced to serve a homogeneous market worldwide. When there is a convergence of needs due to consumer behavior or socio-economic similarities, a product can be produced to serve these markets anywhere in the world. For example, sporting equipment and products and services such as club jerseys, boots of EUFA Champions league matches are sold to customers all over the world without any modification. Similarly, Sony uses the same packaging across several countries for its Play station product; Coca-Cola has prevailed successfully in the global market while Emirate Airlines adopts the same marketing strategy and services to serve its global markets.
Planned obsolescence: Obsolescence occurs when an object, service, or practice is no longer wanted even though it may still be in good working order. Obsolete is something that is already disused or discarded, or antiquated. Therefore, planned obsolescence is a deliberate strategy which a company employs to purposefully make a product outdated or non-functional within a set period of time, so that customers have to buy a new one. A good example of this is the lifespan of a light bulb which does not lasts longer; one has to keep buying more and more. For planned obsolescence to work, the customer must feel that he has value for money from using the product as well as having enough confidence on the company.
Planned obsolescence is a business strategy in which the life of a product is designed and built into it from its conception. This is done so that in future the consumer feels a need to purchase new products and services that the manufacturer brings out as replacements for the old ones. For instance, fashion of any sort is deeply inclined to built-in obsolescence. Also, the strategy of planned obsolescence is common in the computer industry too. New software is often carefully developed to reduce the value of the previous version in the eyes of consumers. However, a strategy of planned obsolescence can backfire if a manufacturer produces new products to replace old ones too often, which leads to consumer resistance.
Planned obsolescence can be physical, functional, style, and technological obsolescence. Physical obsolescence is a situation in which a product becomes outdated due to the wear and tear of the product. Old products such as refrigerators, car tires, and clothes fall in this category. Functional obsolescence is a reduction in the usefulness or desirability of an object because of an outdated design feature, usually one that cannot be easily changed. Sometimes functional obsolescence is built in the product when designing it. For example, car or cell phone batteries, electric bulb, entry visa and spark plugs, among others. With regards to style obsolescence, whenever a product is no longer desirable to the customers because it has gone out of the popular fashion, its style is considered to be obsolete. It is principally a matter of esthetics and not one of performance or function. The periodic introduction of new models of cars by Honda and Toyota which renders the existing models out of fashion is an example of style obsolescence. While technological obsolescence occurs when a technical product or service is no longer needed or wanted even though it could still be in working order. Technological obsolescence generally occurs when a new product has been created to replace an older version as a result of technological development. For example, the introduction of computer and printer render manual typewriter obsolete, the same thing applies to digital camera and analog camera like Kodak, color and high definition television versus black and white television, and so forth.
Product deletion strategy: Whenever a product is not performing and is not patronized by customers, it is a good candidate for deletion, i.e., deciding to remove or phase out the product from the market. The strategy for deletion can be instant or gradual depending on the fate of the product in the market. If it is consuming money without bringing any return, instant deletion is recommended. But if the product is still bringing some revenue to the company, it can be allowed to die gradually in order to harvest the remaining cash inflows. Alternatively, that product can be withdrawn from its existing market and introduced in another market to start its new life cycle.