PRODUCT MANAGEMENT FOR ALL

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PRODUCT MANAGEMENT 
 
BLOCK 1: PRODUCT MANAGEMENT — INTRODUCTION 
Unit 1: Introduction to Product Management 
Unit 2: Product Management Process 
Unit 3: The Product Planning System 
 
BLOCK 2: MANAGING PRODUCTS 
Unit 4: Product Line Decisions 
Unit 5: Product Life Cycle 
Unit 6: Product Portfolio 
Unit 7: Product Pricing 
 
BLOCK 3: BRANDING AND PACKAGING DECISIONS 
Unit 8: Branding Decisions 
Unit 9: Positioning Decisions 
Unit 10: Brand Equity 
Unit 11: Packaging Decisions 
 
BLOCK 4: NEW PRODUCT DEVELOPMENT 
Unit 12: Organizing for New Product Development 
Unit 13: Generation, Screening and Development of New 
Product Ideas 
 
BLOCK 5: IMPLEMENTING NEW PRODUCT DECISION 
Unit 14: Concept Development and Testing 
Unit 15: Pre-test Marketing and Test Marketing 
Unit 16: Product Launch 
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Block 1: PRODUCT MANAGEMENT — 
INTRODUCTION 
 
 
Unit 1: Introduction to Product Management 
 
Unit 2: Product Management Process 
 
Unit 3: The Product Planning System 
 
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1. UNIT I: Introduction to Product Management 
 
Learning Objectives 
 To understand how Product Management evolved 
 What a Product Manager has to do. 
 To understand the linkages of Product Management with other functions 
in the organisation. 
 
 
Structure 
1. Product Management 
2. Historical Background 
2.1. Your Learning 
3. Product Management and its Interface with Other Organisational 
Functions 
3.1. Identifies a market problem 
3.2. Quantifies the opportunity 
3.3. Communicates the market opportunity to the top 
management 
3.4. Communicates the problem to Product Development team 
3.5. Communicates to Advertising/ Promotion team 
3.6. Empowers the sales team 
4. Your Learning 
5. Summary 
6. Key Words 
7. Exercises 
8. Further Reading 
 
 
 
 
1. Product Management 
Product Management is a function within a company that deals with the 
planning or marketing or forecasting of a product or products through at all 
stages of the product lifecycle. 
Product management and product marketing are different yet complementary 
efforts with the objective of maximizing sales revenues, market share, and 
profit margins. Product Management has several roles which cover many 
activities from identification to development, to launch and even support 
during its life cycle. The issues handled by the product management team vary 
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from being strategic and/or tactical in nature depending on the type of 
organisation and where in the organizations hierarchy the function lies. Product 
management can be a separate function or a part of marketing or engineering 
functions. 
Since better and new products are a key differentiator in the market and are 
what drives company‘s profits Product Managements main focus is on new 
product development. However since they are the ones who know most of the 
product and the basis of its origin the Product management is responsible for 
the growth and development of the product in the market and sometimes they 
may even be responsible for the bottom line generated by the product. 
 
2. Historical Background 
Business executives throughout industry spend more and more time trying to 
answer one basic question: ―How can I assure continued profitable growth of 
my business?‖ The answer to this question is quite simple: ―By providing the 
optimum solution to the market needs.‖ 
 
Market needs are classified as Goods or Services. All these have a tangible 
value and can be commercially produced and marketed profitably. For our 
purpose, we shall classify both – goods and services – as products. Hence, if 
we were to answer the above question again, it could be: ―By providing a 
continual flow of new products to satisfy market needs or desires.‖ The 
question then arises: ―Now where will these products come from?‖ 
 
In the early 1900s, new products were created by gifted inventors who worked 
with crude equipment and facilities but were creative geniuses with 
determination and vision to follow their discoveries in spite of tremendous 
difficulties. Men like Edison, Watt, and Marconi created products like the 
electric bulb, steam engine and the telegraph. All their products came from 
years of hard work and hit and trial experiments. Once these basic inventions 
were developed, new products evolved. For example, after the steam engine, 
motorised transportation in the form of cars became a reality, and steam boats 
replaced horses and sailboats. 
 
By the end of World War I, new technologies had become so complex and the 
speed at which new developments were made became so rapid, that the 
individual inventor became less and less relevant. Instead, companies started 
organised development of products. World War II gave a further impetus 
to the development and refinement of products. However, most of these were 
based on Research and Development (R&D) in a given manufacturing company 
and were not driven by customer needs. The R&D product planning programs 
were expensive and slow, and they often were unproductive. Managements 
then concluded that a new approach was needed to make product development 
more productive. They realised that to be successful they needed to identify 
products that could satisfy the customer’s needs and desires, and which 
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could, at the same time, match the company's manufacturing capabilities 
keeping in mind the constantly changing market conditions. 
 
Thus, it was no longer a case of merely reacting to market conditions. A 
company needed to stay ahead by creating new markets while continuing 
to dominate existing ones. Hence, what was needed was a formal approach to 
Product Planning and Management. 
 
The formal process of Product Planning & Its Management is led by a Product 
Manager whose primary role is to serve as the ―Voice of the Customer‖. He 
is responsible for the ―4P’s” of Product Management: 
 
– Price 
– Place 
– Product 
– Promotion 
 
Note: This includes indirect management and cooperation with other members 
of various groups 
 
In this book we will go through the various aspects of Product Management as 
is now undertaken in this complex business environment. The book has been 
structured in five broad areas. The first being the introduction to the basic 
subject itself where we will not only have a look at the historical background 
and how product management has come out from being a product of ‗creative 
geniuses to a well structured process with a reasonably well defined interface 
within the organisation. In the chapter 2 and 3 the whole process involved in 
managing product development and how once we have decided what product 
to make the organisation needs to function in order to bring our the product to 
the market in the shortest and most efficient manner. It also discusses how the 
product launch can be staggered to provide a strategic advantage to the 
Marketer. 
Once we are through the basics we go to the next section consisting of units 4, 
5, 6 which will discuss in greater detail how we must organise ourselves to 
develop new products and go through the process of generating new ideas and 
evaluating which of them is economically viable before actually taking up the 
developmental effort of time and money. 
 
The next section with units 7, 8, 9, and 10 will help you understand how from 
the concept we actually undertake the development of the product, and pre-
test or test market the product before we actually launch it in the market. 
Once we find that eh product meets our marketing objectives the steps we 
need to follow to launch the product. 
 
Now that we have launched our products we need to understand how to 
manage these products that are in the markets. The units 11, 12, 13 and 14 
will give you an insight into where new products should be added, when should 
you support them in their life cycle and when should you decide to withdraw 
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the product. In thissection we will also understand how to balance the 
product portfolio and the factors affecting the pricing decisions. 
 
We know that in addition to the product it is equally important to package and 
brand the product in a manner that it fits in the product positioning that has 
been decided by the product management team. So the Units 15, 16, 17 and 
18 will take you through the processes followed to arrive at branding, 
positioning and packaging decisions. 
 
2.1. Your Learning 
1. What was the need for an organised product management process? 
2. Do you think that with today‘s organised product management process 
we are able to address customer needs better? 
 
3. Product Management and its Interface with Other 
Organisational Functions 
 Though all the ―P‘s‖ are interlinked and affect each other, it is the Product 
that has the most profound effect on all the other functions. Hence the 
study of the product management process is an extremely important process. 
It is this function that has a large impact on the bottom line of the organisation 
and also whether the company is able to stay ahead of competition giving the 
company a strategic advantage to leverage. 
 
Product Management interfaces with other functions in the following manner: 
 
3.1. It identifies a market problem/ customer needs 
This means that the Product Management team uses methods and 
techniques that help it to identify the problems that the customer would 
like to have a solution for. Once they identify this, they create a product 
that will resolve the problem or satisfy that particular customer need. 
 
3.2. It quantifies the opportunity 
Any new product development that will resolve a customer problem will 
need a company‘s resources in terms of time, people and money. The 
company‘s decision to invest in these costs will depend on the business 
opportunity that could be created by this product. The Return on 
Investment (ROI) must be large enough for them to make sufficient 
profits in order to recover the initial investment costs within the break-
even period and then convert it into a profit making proposition. 
 
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3.3. It communicates the market opportunity to the top 
management 
Since only the top management can commit resources for new product 
development, the product management team must provide them with 
the business rationale for following the opportunity and give them a 
business plan to convince them to commit resources for research and 
development. 
 
3.4. It communicates with the Product Development team 
Once the top management has given their approval for development, the 
product development team must be explained what the market 
requirements of the finished product are so that they are clear about 
what they need to develop. Let us take an example: In the initial stages 
of the development of mobile phones, the customer had to hold the 
phone to his ear to listen to the other person. Phone companies 
understood the market need of their customers not wanting to hold the 
phone to their ears. They communicated the product development team 
that they need a product that fdoes not force the customer to hold the 
phone to his ear. The product development team developed an earphone 
that was linked to the phone through a thin wire plugged to the phone. 
While this was better than the earlier system where the customer had to 
hold the phone to his ear, the Product Management team wanted a 
further improvement since the wires always interfered while handling the 
mobile phone, and in any case, the customer had to continue to hold the 
phone in his hand. The product development team then came out with a 
cordless earpiece that solved this problem. 
 
3.5. It communicates to Advertising/ Promotion team 
Each product is positioned for a specific category of customers. The 
Project Management team shares its vision with the publicity / sales 
promotion team giving them the positioning of the product. E.g.: A 
Maruti 800 is positioned for a middle class customer while a Honda 
Accord is positioned for the high income customer. They type of 
advertising communication for each type of customer is different and 
hence the Product Management team must explain the positioning to the 
Advertising team so that the right communication can be generated. 
 
3.6. It empowers the sales team 
The sales team also needs to understand the product so that they can 
effectively sell the product to the customer. That is again the 
responsibility of the Project Management team – to define the sales 
process and identify the necessary sales tools to sell to the 
customer. A Maruti 800 customer will focus mostly on price and may 
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not be so feature conscious while the Honda Accord customer will focus 
more on features, styling, and comfort. Hence the selling tools for both 
the products will be different. 
 
3.7. Your Learning 
1. How does Product Management function impact Marketing of a 
product? 
2. How does the top management benefit from a separate product 
management team? 
 
 
 Fig: 1.1 Product Managements Role 
 
 
4. What a good Product Management must do 
A good Product Management Team or a good Product Manager must work 
in order to keep his company ahead of competition and help provide a 
competitive edge to the company. Some of the characteristics that 
differentiate a good product management from a bad one are: 
a. Realize your product is not the centre of your customer’s 
worlds 
A good product manager must realize that his product is most 
probably one of many products which a customer uses every day. A 
product manager is likely to think about his product all day, every day. 
It is very unlikely that the customer think about or uses this product 
nearly that much; to them, it is more likely just one of the many 
products in the market. Thus decisions about product design and 
features must keep this in mind. 
If we are over absorbed about our product and think the customer will 
understand everything or will find everything we develop useful, we 
may create problems for ourselves. For example: 
 We can add features that we consider useful but if the 
customer does not use them then it is of no use putting the 
feature no matter how useful we think it is. 
 If we use very specific terminology (which sometimes gets 
developed internally in the organisation during the development 
phase of the product or may be a technical term not generally 
used) which is not easily recognized by anyone new to the 
product. Then this may not be understood by the customer. 
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 If we get too involved with our product we may miss 
identifying how it can be used with other products thus missing 
potential business opportunities. 
Hence a wise product manager will generally: 
 Use existing standards whenever they are relevant and 
applicable. If we have a standard QWERTY key board for 
computers and we change this for some other purpose then it 
may become difficult for customers to use this. 
 Realize that products work with other products which the 
organization produces as well as products and systems created 
by others — including your competitors. 
 
b. Save some features for later 
It‘s important to include enough features when a product is first 
released, and delaying the release of some features helps because: 
 Customers have difficulty in grasping too many features at 
once. Also extra features may distract the customer towards the 
less important features and make him miss the truly 
differentiating features. 
 If features are added with passage of time then product life 
can be extended by giving the customer an improved version of 
the product. Many times these can be given as priced value 
additions. 
 Giving some features later may also provide the opportunity 
to upgrade or modify existing features that may be needed by 
the current market customerexpectations. It is not possible for 
the product manager to know and plan for all features needed 
by the market and hence this enables him to keep his product 
abreast with the market and deliver a better bottom line. 
 
c. Product management is more than prioritizing product features 
Product managers needs to have a much broader view and needs to 
see and understand everything from the basic customer needs to the 
business model to the product roadmap to the go-to-market strategy. 
Unfortunately, many product managers take the easy feature-focused 
development mode. As a result they do not see their function in a 
holistic manner. 
 
d. Differentiate to avoid being a ―me too‖ 
http://www.goodproductmanager.com/2009/11/10/save-some-features-for-later/
http://www.goodproductmanager.com/2009/09/24/product-management-is-more-than-prioritizing-features/
http://www.goodproductmanager.com/2009/01/15/differentiate-to-avoid-being-a-me-too/
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A good product manager must try to differentiate his product and 
avoid being a ―me too.‖ Getting into the market speedily is definitely 
important; however it is always better to come into the market later 
with a better product than slightly faster with something that does not 
stand out. Being first is good but it is no guarantee of success. 
Amazon.com was not the first online bookseller; Google was not the 
first search engine; the iPod was not the first portable MP3 player; the 
list can go on and on. 
In “Product Leadership: Creating and Launching Superior New Products , 
Robert Cooper” offers some amazing statistics on ―truly superior, 
differentiated products‖: 
One of the top success factors we uncovered is delivering a 
differentiated product with unique customer benefits and superior 
value for the user. … Our NewProd projects studies show that such 
superior products have five times the success rate, over four times 
the market share, and four times the profitability as products 
lacking this ingredient. 
“Truly Superior, Differentiated Products” had an average 98% 
success rate and 53.5% market share, while “Me-Too” Products 
averaged an 18.4% success rate and 11.6% market share. Though 
the desire for quick revenue and immediate return within 
organizations is often strong, though there is good cause for 
launching the “right” product. In the end, the extra effort put into 
figuring out how to differentiate a product will be well worth the 
effort. 
 
 
e. Reinforce your product-related communication 
Product managers have to ensure that any communication they send 
out must be clear and consistent. They need to do this in order to 
avoid confusion over action proposed or being taken. The product 
manager has to ensure that any communication he sends out must be 
understood and taken note of by all concerned with the product – be 
it sales, or distributors or even the internal departments like 
engineering, R&D, marketing etc. So that all of them are on the same 
page. 
We all know that communication is one of the most difficult things to 
do and many times people do not get the communication in one go. 
Thus the product manager must follow up and make sure that the 
communicated information has been received and understood by the 
recipient. 
http://www.amazon.com/gp/product/B000B86FPK?ie=UTF8&tag=hotobeagoprma-20&linkCode=as2&camp=1789&creative=390957&creativeASIN=B000B86FPK
http://www.goodproductmanager.com/2008/11/20/reinforce-your-product-related-communication/
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f. Do not think that a single product will solve all problems for 
customers 
We may like to make a single product that will solve all customer 
problems since this way our development costs would be minimum 
and profits would be maximum. However, trying to make it everything 
for everyone usually results in a product that does nothing for no one. 
In order to make a product do everything for everyone we would need 
to add a lot of features to it making it extremely complicated for 
most. And it makes it difficult or the marketer to sell the 
differentiating factor to the customer. 
We can see that today we are seeing more and more products that 
are focussed on a specific benefit – eg anti dandruff shampoos (Head 
and Shoulders, Clinic All clear), powders for heat problems 
(Navratan), soaps with cream (Dove), Fairness cream for Men, etc. 
This is not to say that an all-in-one strategy is always bad. Product 
managers can still choose to follow an all-in-one strategy; they just 
must be aware of the impact it may have on the perceptions of 
customers. Even then, an all-in-one product should be that way 
because it provides value and solves specific problems for the 
customer, not just all-in-one for the sake of being all-in-one 
g. Define the problem before solving it 
Product managers and many others unfortunately assume the 
problem is clear and jump straight away to solving it. However, 
improperly-defined problems lead to improper solutions. 
Albert Einstein is supposed to have said that, given one hour to save 
the world, he would spend 55 minutes defining the problem and 5 
minutes finding the solution. This quote does illustrate an important 
point: before jumping right into solving a problem, we should step back and 
invest time and effort to improve our understanding of it. 
The first and foremost thing to be done before solving the problem is 
to define it correctly. This definition should neither be too narrow or 
too broad. A narrow definition will limit the scope of the solution and 
similarly a very broad definition will give us solutions that may not be 
relevant to the problem. 
Going too far in either extreme may be unproductive and inefficient in 
many situations. 
Product managers must not be in a hurry to write down features 
without clearly defining the problem. Relooking at problems can 
always provide a fresh perspective and give interesting solutions. 
Many times the product manager should take the help of research to 
http://www.goodproductmanager.com/2008/11/10/reconsider-your-jack-of-all-trades-strategy/
http://www.goodproductmanager.com/2009/03/09/define-the-problem-before-solving-it/
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clarify and define issues. The time spent in defining problems in the 
early stages always helps save time spent later in resolving issues. 
 
 
5. Summary 
Historically product development was dependent on work undertaken by 
inventors and geniuses. Later with the advent of competition it became 
more organised. Products were developed in research laboratories of 
large companies. However these were products that could be developed 
rather than what was needed by the customer. As competition increased 
further companies were forced to understand what were the customer 
needs and develop products that were needed by him. This led to the 
creation of the Product development function. The product development 
function is an important function that needs to interface with all functions 
of an organisation. 
 
6. Key Words 
1. Goods and Services – Goods and services are the outputs offered by 
businesses to satisfy the demands of consumer and industrial markets. 
They are differentiated on the basis of four characteristics: 
a. Tangibility: Goods are tangible products such as cars, clothing, and 
machinery. They have shape and can be seen and touched. Services are 
intangible. Hair styling, pest control, and equipment repair, for example, 
do not have a physical presence. 
b. Perishability: All goods have some degree of durability beyond the time 
of purchase. Services do not; they perish as they are delivered. 
c. Separability: Goods can be stored for later use. Thus, production and 
consumption are typically separate. Because the production and 
consumption of services are simultaneous, services and the service 
provider cannot be separated. 
d. Standardization: The quality of goods can be controlled through 
standardization and grading in the productionprocess. The quality of 
services, however, is different each time they are delivered. 
2. Continual flow of new products – The customer needs to get 
something new in order to stay interested in a company‘s product. This 
can be in the form of new features, new shapes, new products and even 
a new price. This innovation is the continual flow of new products. 
3. Voice of Customer – is a term used in business to describe the process 
of capturing a customer's requirements. Specifically, the Voice of the 
Customer is a market research technique that produces a detailed set of 
customer wants and needs. Voice of the Customer studies typically 
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consist of both qualitative and quantitative research steps. They are 
generally conducted at the start of any new product, process, or service 
design initiative in order to better understand the customer‘s wants and 
needs, and as the key input for new product definition, and the setting of 
detailed design specifications. 
4. Return on Investment is usually expressed in percentage. It is the 
percentage of money gained or lost on an investment relative to the 
amount of money invested 
5. Breakeven Point is the point at which cost or expenses and revenue 
are equal: there is no net loss or gain, and one has "broken even". 
6. Business Rationale defines the fundamental reason or reasons why 
developing the product will be beneficial to the business. It outlines a reasoned 
step by step explanation. 
7. Business Plan is a formal statement of a set of business goals, the 
reasons why they are believed attainable, and the plan for reaching 
those goals. It may also contain background information about the 
organization or team attempting to reach those goals. 
8. Product Positioning means the process by which marketers try to 
create an image or identity in the minds of their target market for their 
product, brand, or organization. The objective of this to ensure that the 
consumer remembers the product or brand in spite of the noise created 
by the communication clutter. 
9. Sales Process is a systematic approach to selling a product or service. 
It includes all aspects of sales and helps in creating standardized 
processes which allow monitoring of processes and in enhancing sales. 
10. Sales Tools All factors that help in selling a product are the sales 
tools. These include consumer schemes (e.g. buy one get one free, buy a 
car and get a chance to win a TV, etc) advertising, printed leaflets, 
banners, channel push, etc. 
 
7. Exercises 
 
1. How can the product management team help in defining the sales 
process? 
2. How can the sales tools be developed by the product management team? 
3. How is the product management team different from the product 
development team? 
4. The product management can help improve sales? Do you agree or 
disagree with this statement and why? 
5. What is the importance of Product Development? Do you think that an 
organised process of development is helping us develop products that 
the customer needs? 
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8. Further Reading 
1. Kahn, Kenneth B. (2001). New Product Planning. New Delhi, India: 
Response Books Page 1-6, 17-20 
3. Gorchels, Linda, (2006) The Product Managers Handbook, New York, 
USA: McGraw-Hill Chapter 1 
4. Mukherjee, Kaushik (2009) Product Management , New Delhi, India: PHI 
Learning Pvt. Ltd Pg 4 – 10 
5. Lehmann, Donald R and Winer, Russel S, (1997) Product Management, 
Singapore, Irwin/ McGraw-Hill Pages 15 – 18 
6. Crawford, Merle and Benedetto, Anthony Di (2004) New Product 
Management Singapore, McGraw Hill Page 5 – 10 
 
 
 
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2. UNIT II - Product Management Process 
 
3. Learning Objectives 
 The Product Management Cycle and its significance in Product 
Development. 
 Management of the Product Development Process. 
 Some key issues to be considered while discontinuing an existing product 
and launching a new one. 
 
 
Structure 
1. Introduction 
2. Product Management Cycle 
2.1. New Product Identification 
2.2. New Product Definition 
2.3. Product Development 
2.4. Product Launch and Growth 
2.5. Product Discontinuation 
3. Your learning 
4. Summary 
5. Key Words 
6. Exercises 
7. Further Reading 
 
 
1. Introduction 
We have seen that a company needs to stay ahead not only in its existing 
markets but also in new markets that it expands into. In order to stay ahead, it 
needs newer products on an ongoing basis that meet the needs of a continually 
changing market. We have also seen that the product development process 
has become a complicated and expensive process. Hence a structured 
approach to product development is needed. This is also called the Product 
Management Process. 
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The Product Management Process is cyclical in nature – this means that 
product development is a continual and ongoing process which goes through a 
cycle. As old products die new ones are born and so the cycle goes on. This 
process of managing the entire lifecycle of a product from its conception, 
through design and manufacture, to service and disposal integrates people, 
data, processes and business systems and provides a product information 
backbone for companies and their extended enterprise 
2. Product Management Cycle 
The ―Product Management Cycle‖ has five stages: 
i. New Product Identification 
ii. New Product Definition 
iii. Product Development 
iv. Product Launch and Growth 
v. Product Discontinuation 
 
2.1. New Product Identification Phase 
This is the phase in which the company conducts various activities in order to 
understand the customer’s needs and desires and define the functional 
requirements of the product. 
The product management group is entrusted with the task of creating a 
systematic process to understand the customer requirements and create a 
document that outlines what the product functions should be. During this 
phase the product development personnel and people from top management 
undertake some of the following activities: 
i. Customer surveys and responses to existing products so that 
improvements to existing products can be undertaken. They also try 
to understand what the customer feels are his pain areas (areas 
where the customer has problems). Many times it is the solution of 
the pain area of the customer that gives rise to new innovations. 
When a company is selling a product in its target segment then this 
product will fulfil all the needs of a part of this segment, most of the 
needs of a large part of this segment and some of the needs of the 
balance. In order to know whether the company‘s products are 
meeting the customer‘s expectations the company‘s sales force or an 
agency appointed by the product management team. These people 
http://en.wikipedia.org/wiki/Product_(business)
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generate a feedback from the customers some of which is extremely 
useful in generating new ideas. 
ii. They read journals, magazines, books, and also go to 
international exhibitions, conferences and see what innovations 
are being displayed and discussed by eminent scientists, business 
associates and competitors. This helps them keep abreast with the 
latest developments around the world so that they can use some of 
these in their own products. It also helps understand what the 
competition could possibly develop in terms of new products. 
iii. Companies create think tanks that take in all the data that comes in 
from various sources and come up with various ideas. This consists of 
cross functional teams – teams consisting of people from various 
departments – many of whom may eventually be involved in the 
development of the product. These cross functional teams get all the 
inputs that is available for product development and they also bring 
into the team their knowledge and experience. Using this they debate 
and come up with ideas for new produce development. 
iv. All interestinginformation is collated and circulated organisation-
wide – usually strategic planners or technology policy makers. 
Organisations generally circulate information about products, 
technologies, business processes, competition, etc within the 
organisation. This not only helps people keep abreast with the latest 
trends but also allows the germination of new ideas. 
During this phase several product ideas are generated and there is a fuzzy 
view of each of these products. 
2.2. Product Definition Phase 
During this phase various ideas for products generated in the first phase are 
discussed and evaluated so that the final product is finalised. During this phase 
the following activities are undertaken: 
i. The high level functions of the product are defined. High level 
specifications mean that these specifications are an overview of all the 
functions desired in the product. These are stated simply and are meant 
so that everyone in the organisation can understand the functions are 
and how it solves the customer’s problems. For example when the 
Nano was planned by the Tatas a high level specification would have 
given that they need to develop a car that will cost only Rs one lakh to 
the customer, would look modern, have the basic comforts, and that it 
would be positioned for a two wheeler owner who would aspire for a four 
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wheeler or an existing small car buyer who would like to buy a more 
economical more modern design. 
ii. A business case is made for the new product. This business case 
defines the size of the market, the segment for which the product has 
been defined, what are the investments needed to make and sell the 
product and what will be the profit that the product make during its life 
cycle. It also outlines what are the competitive products currently and 
also likely to be launched by the competitor. Once the basic product has 
been defined like the Nano the product management team will have to 
make a detailed report in which they will have to evaluate whether this 
product will make business sense. At the end of the day the business 
needs to make a profit and if a product cannot make profit it will not be 
considered for the next stage of development. The study done in this 
phase is relatively preliminary and is done to understand the basics of 
the economic feasibility. 
iii. In this stage the product management team has to sell the idea of the 
product to various people in the organisation – sales, production, R&D, 
HR, etc. Once the Product Development team has determined that the 
product is viable it has to convince the management that the product not 
only meets the strategic objectives but also the profit objectives of the 
organisation. Until the management is convinced the financial 
commitment needed to commence product development cannot be 
made. The presentation to the management will also have details of the 
financial support needed for development, the time by which the product 
will be developed, the business prospects and the techno-commercial 
feasibility. 
During this phase, the Technology group with industrial engineering 
group conduct a feasibility study; In addition, an economic study is 
done. Let us say in the case of the Nano once the basic product idea had 
been agreed to in principle the product development team would have 
conducted a study as to understand how they can meet the given 
objectives of the product specification and yet make the product feasible. 
This is done in consultation with the technical teams of the organisation 
like R&D, operations, procurement etc in order to understand broadly if 
the product can be made economically, At this stage many assumptions 
are made based on which the decision is taken. For example the product 
management team will assume that a certain technology needed to 
manufacture the product will be available at a certain cost and base their 
calculations on that. This assumption is based on the experience of the 
people in the organisation and no formal quotation is taken since it has 
19 
 
not been decided for sure that this is the technology that will be used or 
some other option will be taken. Later once the decision is taken then 
the organisation tries to get the technology for a price below the figure 
taken in the assumptions. 
2.3. Product Development Phase 
Once the product‘s high level specifications have been finalised and the top 
management has approved this product and committed resources for its 
development, the Product Management Group involves the Product 
Development Team. This team consists of people from R&D, Manufacturing, 
Industrial Engineering and Sales. They are given the high level 
specifications of the product and given the tasks of creating the actual physical 
product. During this phase: 
i. The various functions involved in the Product Development Team make a 
detailed specification of the product. They also define the look and 
feel of the product. The task of converting a high level specification as 
given in 2.3.2.i into a detailed product specification is not a small task. It 
involves a detailed process in which several functional areas are involved. 
Each functional area provides inputs in the best way of meeting the 
products objectives and the Product Development team considers all the 
inputs and decides on what options to take. During this period the 
product specifications may undergo minor changes keeping in view the 
strengths of an organisation – however the overall functional 
requirements will remain the same. 
ii. They evaluate the various options in manufacturing processes and 
the need for any new technology to make the product. They also 
evaluate the impact of various options in making the product in terms 
of investment needed, profits generated, etc. While making the detailed 
product specifications the management also evaluates the manufacturing 
options it has for the new products. They need to evaluate whether the 
existing manufacturing processes are adequate for making the new 
product, or they need to expand the manufacturing set up or they need 
to create an altogether new facility. Many times it happens that new 
technology needed to manufacture the new product has a significant 
impact on the existing processes and so the management needs to 
evaluate whether such a technology should be used or not, whether this 
is going to be beneficial to the organisation in the long term, since it may 
involve a lot of retraining of its manpower for using the new technology. 
iii. The first prototype of the product is developed and evaluated to see if 
the product meets all the functional requirements set out in the initial 
20 
 
document. This is an important stage in the product development cycle. 
This product is put through functional trials to see if the specifications 
laid out at the beginning are met – not only form the engineering point 
of view but also from the customer‘s requirements point of view. At this 
stage sometimes a few chosen customers are also shown the product for 
their feedback. The feedback from testing and the customer is 
considered by the product management team and they decide on the 
changes to be incorporated in the product. 
iv. At this stage the product is more or less finalised and the product 
functionality frozen. However some fine tuning may continue till the 
product launch and even during the life of the product. These 
modifications are done to suit the conveniences of manufacturing or 
additional features needed by Sales. 
v. Once the final product comes out of the factory it is once again shown to 
some key partners (much larger numbers than before) in the market and 
sometimes test marketed in a small area to get the more feedback. 
Test marketing is usually done so that the actual user experience is 
received. It is normally done in a small representative market awayfrom 
the main market of the company. The reason for doing the test away 
from the main market is that in case the test fails or has a negative 
impact the main market (which is significantly larger) must not be 
affected. This feedback also is discussed internally and the relevant 
parts are incorporated in the product. 
i. The product is then ready for launch. 
 
 
 
 
 
2.4. Product Launch and Growth Phase 
The product launch needs a lot of preparation so as to ensure that the product 
succeeds in the market. Just making a good product is not enough to ensure 
its success. Thus by the time the final product is ready, the Product 
Management group has to develop the support needed to launch the product in 
the market. They have to: 
21 
 
i. The product management team knows how they have positioned the 
product and what their target segment is. Along with the advertising 
department they have to develop the campaign needed to launch the 
product. Now keeping with the company‘s overall business objective they 
know how much they can spend on this campaign and so they plan the 
media according to this need. 
ii. The entire sales force, the channel partners must know what product 
they are selling and how it compares to competition. The customers 
must be able to understand the product they are buying. Hence the 
Product Management team must also develop the tools needed by the 
sales team and channel partners to sell the product effectively and 
for customers to understand them. They create tools like sales 
catalogs, leaflets, comparison charts with competition, explaining 
application areas and target segments for the product, they provide the 
pricing strategy, etc. 
iii. The Product Management group continues to provide support to the 
product throughout the life of the product by determining ways to 
improve sales, profitability of the product. Many times they have built 
in features in the product that have not been released with the initial 
launch of the product. These features are added into the product in a 
phased manner so as to stay ahead of competition and keep the 
customer interested in the product. 
iv. They also keep taking a feedback from the customer so that small 
incremental improvements can be made to the product thus increasing 
its life and profitability of the company while keeping it ahead of 
competition. 
v. We know that capital is scarce and new product development is 
expensive. Thus if we can prolong the life of the product it can help 
the company make profits while staying ahead of its competition. 
The products life and success will depend to a large extent on the 
ground work undertaken by the Product Management Group from the 
time of its development to its launch and stay in the market. 
2.5. Product Discontinuation Phase 
This is a critical phase in the management of products. This is the phase when 
the product is to be discontinued and a new product has to be introduced. This 
seems to be quite simple but in reality it is a difficult decision. The reason is 
that on one hand we have a product that is established in the market and has 
customer acceptance, and, on the other hand, the new product has still to be 
22 
 
accepted by the customer. If the current product is discontinued and the new 
product is not accepted by the customer, it can cause a major setback for the 
company. If we take the example of the Maruti 800 car – it is a car that has 
been selling in large numbers, even though competition has introduced many 
products. Now if Maruti introduces a new product in its place they are not sure 
how the customers will feel about. We know that the Maruti 800 is a car that 
has excellent availability of spares and maintenance. Even the roadside 
mechanic can repair it and so there is no problem in using it anywhere in the 
country – city, town or village. Any new car will take some time to penetrate 
the market so much. It will also take some time for Maruti to train its 
engineers in their service establishments across the country. Thus there is 
always some danger of losing a part of the market share to competitors. Hence 
some of the considerations in this phase are: 
i. Availability of a new product – The foremost consideration in 
introducing a new product is its availability. 
ii. Awareness of the Competitor’s Products - At the same time we need 
to see what the competitor is doing. If the competitor has already 
launched a new product, it will force the company‘s hand in launching its 
own product. For example when Apple launched its iPhone with a large 
touch screen technology, other phone manufacturers were forced to 
launch similar products within a very short time. 
iii. Customer Maturity - Even though a new product may be ready, it may 
not be possible to launch it because the customers are not ready for it. 
E.g.: consumer durable manufacturers had washing machines ready in 
their product portfolio but could not launch it since the Indian customer 
was not ready for it. The Indian customer at that time felt that washing 
by hand was the done thing and that a washing machine never washed 
the clothes properly and that they never came out clean. 
iv. Adequate Training - In addition before discontinuing an existing 
product and launching a new product the organisation needs to be 
trained in it – E.g.: the manufacturing team must know how to make it, 
the sales team and its distributors must understand how to sell the 
product. If it is a product that needs installation and maintenance then 
this team must also be trained. 
v. Adequate stock must lie in the distribution channel so that once the 
product is launched and the campaign breaks out, sales must not be lost 
due to non -availability at the retail end. 
23 
 
Nowadays, because of the speed at which the market is changing and 
competition is responding, existing products are discarded even when they 
have not completed their economic life. This puts more pressure on the 
Product Management Group to develop newer products that will give returns in 
shorter and shorter periods of time. We therefore see that many CEO‘s make 
the product management team report directly to them since it has one of the 
most profound effects on the bottom line of the company. 
 
 
Fig 2.1 Product Management Cycle 
 
3. Your Learning 
1. It is said that the product discontinuation phase is one of the most 
important phases in Product development? Why is this so? Please discuss 
whether you agree or not and why. 
2. During the growth phase of the product what are the activities that can 
be done by the product management team to increase its sale? 
 
4. Summary 
The product management process is an important process in order for 
the company to stay ahead of its competitors. This process is divided into 
five phases starting from the need identification to defining the product, 
which is then developed. This developed product is the launched in the 
market and all activities are undertaken to ensure its growth. At the end 
as customer acceptance drops the product is discontinued. This is an 
important phase as in this phase the company has to ensure that 
another product is ready to take over the market being vacated by the 
existing product. Also the company must ensure that other infrastructure 
needed to support the new product is ready and in place e.g. training of 
manpower, distribution channel with adequate stocks, etc 
 
5. Key words 
1. Pain Areas – these are the areas where the customer has a 
problem. These create opportunities for companies create a 
product. For example – people wanted to make calls more 
conveniently and did not want to walk up to a fixed line phones. 
This gave an opportunity to make cordless phones. These could be 
24 
 
used inside the house but could not go very far. These phones were 
the precursors of mobile phones. 
2. Think tanks– are a set of people whose job is to think / develop/ 
create new products or concepts. 
3. High Level Specifications – these are broad specifications for 
product usually used for one that is under development. These are 
created in the initial stages to give an a broad idea of the product 
features and design. These specifications are then used to develop 
the detailed specifications. 
4. Business case is a proposal developed by a specific department to 
justify its proposal as making business sense. This is used by the 
management to decide whether to go ahead with the project or not 
5. Size of market is the total possible sale that a product can have 
in a given market. This is given in terms of a Rupee value. For 
example we can say that the market for FMCGs is Rs 40,000 
crores. 
6. Competitive products are competitor‘s products for a given 
category of products. These are the products that will compete in 
the market with the company‘s products. For example a there are 
several motorcycles in the 200 cc category made by various 
companies. These are competitive products. 
7. Feasibility study is the study conducted to understand if it is 
feasible to manufacture a certain product. This is done before a 
technical development or project implementation. 
8. Economic study once a feasibility study has found the project 
feasible an economic study is done to see if the project is 
economically viable. 
9. Industrial Engineering is a branch of engineering that concerns 
with the development, improvement, implementation and 
evaluation of integrated systems of people, money, knowledge, 
information, equipment, energy, material and process. It also deals 
with designing new prototypes to help save money and make the 
prototype better. 
10. Look and Feel is a term used to describe products in fields 
of product design, marketing, branding etc. to describe the main 
features of its appearance. 
11. Prototype is an initial product usually made to show a 
typical impression of the product. 
12. Product Functionality gives the various functions of a 
product. When the product functionality is modified it means that 
some functions of this product are changed because of some 
25 
 
customer feedback or lack of technology to manufacture the 
product or the cost needed to make this product does not make 
economic sense. 
13. Test Marketing is a sample marketing undertaken when a 
product is being introduced for the first time. This is done in a 
small area which is representative of the market in which the 
product has to be finally used. However this market is usually not 
so large that in case the test marketing fails it impacts the launch 
of another modified product. It enables a company to check how 
the product will be accepted by the customers. 
14. Campaign in the context of product management is usually 
used for a sales or marketing promotional set of activities. These 
could include advertising, consumer schemes, ground 
demonstration activities, etc to make the customer aware about 
the product and its features. 
15. Customer Maturity as a person becomes more mature with 
age so do customers become more mature when they become 
more exposed to different types of products. They understand how 
to evaluate products and companies and are not easily misled by 
the jargon of marketers. 
6. Exercises 
 
1. How does understanding the Product Management Cycle help in 
undertaking effective product management? 
2. During the product development phase which are the departments 
involved and why does the product undergo changes in specifications and 
functionality? 
3. Please explain in what ways the product management group can provide 
support to increase sales and profitability of a product? 
4. How do you think feedback about the product can be taken from the 
customer? Once this feedback is taken what process will we follow to 
decide what feedback needs to be considered and what not? 
5. Why is test marketing done and what are the benefits for the company? 
 
7. Further Reading 
1. Kahn, Kenneth B. (2001). New Product Planning. New Delhi, India: 
Response Books Pg 25-36 
2. Mukherjee, Kaushik (2009) Product Management , New Delhi, India: PHI 
Learning Pvt. Ltd Pg 35 - 37 
26 
 
3. Crawford, Merle and Benedetto, Anthony Di (2004) New Product 
Management Singapore, McGraw Hill Page 25 – 32 
4. Gorchels, Linda, (2006) The Product Managers Handbook, New York, 
USA: McGraw-Hill Pages 71-74, 
27 
 
4. UNIT III – The Product Planning System 
5. Learning Objectives 
 To understand the importance of Product Development 
 To understand how Planning is done for Product Development 
 To understand the Process which is used to Develop a Product 
 To understand who is Responsible for the Product Development 
 
 
Structure 
1. Product Planning 
2. Customer Requirement Document 
3. Need for Customer Requirement Document 
4. Contents of Customer Requirement Document 
5. Development of Customer Requirement Document 
6. Strategic Advantage of a Good Customer Requirement Document 
7. Use of Archived Products in Product Development 
8. Summary 
9. Your learning 
10. Key Words 
11. Exercises 
12. Further Reading 
 
 
 
1. Product Planning 
All Product Planning is done to keep the company ahead of its competition 
and to give it a competitive advantage. The Product Planning system must 
dovetail into the business plan of the company. The success of the 
company is determined by the success of its products. Effective product plans 
are those which not only take care of market and customer needs but also 
support company’s growth strategy. Now in order to create effective the 
product plans the product management team and the top management must 
work in close co-ordination with each other since 
1. The product management team has the market information that he 
top management will need to create effective business strategy. 
2. The top management is in a position to give a clear understanding of the 
company’s objectives and direction to assist the product 
28 
 
management team to develop the right products that will assist business 
strategy. 
3. Based on the understanding the top managements objective and 
direction the product management team will also be in a position to 
develop the appropriate execution strategy and milestones in its 
execution. 
 
The Product Management team‘s job is to keep a track of the market 
requirements and map them against the managements objectives and 
direction so that they can provide the right inputs on products to be 
developed to the top management. The product management team collates the 
information from: 
1. Customers 
a. By way of an unsolicited feedback from customers 
b. Customer surveys 
c. Customer needs as identified by sales or marketing teams of the 
company. 
2. Think tanks in companies are always evaluating the environment and 
aligning these with the companies objectives and directions and creating 
product ideas for the product management team to evaluate. 
3. Trade fairs – the product management team also visits various trade fairs 
as this not only tell them what the competition is planning but also gives 
them a new insight into new technologies and developments 
happening all over the world. This also assists them in creating business 
ideas that will give their company a competitive edge. 
4. Competitors activities – since one of the primary objects of product 
development is to provide the company a competitive edge to the 
company, understanding the competitors activities is very 
important. Competitor‘s activities also are a source of product ideas. 
These are found from some announcements that the competitor makes 
in the press, from the sales channel since the distributors are amongst 
the first to know if a competitor is planning something new, or from 
some test marketingthat the competitor undertakes, and many times 
from raw material suppliers. Raw material suppliers visit similar 
companies and come to know of new developments because they are the 
one who need to supply material and components for new products. 
5. R&D or technology development by the company – every company 
that has kept ahead of competition has also undertaken some form of 
research and development of new products. Technology that is developed 
in-house is also a great source of product development. 
29 
 
6. Patents and technology search allow the product management team to 
know what technologies and processes are available for use. Sometimes 
the purchase of a patent/ development of a technology allows the 
company to develop products for which the competition may not be able 
to have an immediate answer. For example when the Xerox Corporation 
developed their copier technology there was no other company in the 
world which had a similar process and Xerox had a virtual monopoly over 
the product sales for many years. It is only later when Xerox became 
over confident and stopped investing in the brand and the technology 
that other companies like cannon, Toshiba came and overtook them. 
 
The Product Management team continuously evaluates the inputs received by it 
from various sources round the year. This information is used by it to develop 
new products that have a strategic fit with the business objectives of the 
company. 
 
All these activities lead to the identification of the product and the 
commencement of the developmental process. This process is a much more 
complex process as compared with the initial steps taken in identifying and 
freezing the customer requirement. These requirements form a part of a very 
important document called the ‗Customer Requirement Document‘. This 
document if created in the right manner can help a Product Manager get the 
product to the market in the most economical manner and also help him 
manage the product through its life giving the company maximum returns. 
 
 
 
 
2. Customer Requirement Document 
At the heart of the whole process of product planning is the development of 
the product. Any delay in the development of the product has a cascading 
impact on the company‘s sales and profitability. Hence it is important that 
before anything else, the decision on what product has to be developed is 
taken quickly; this decision pertains to the product‘s broad specifications 
and marketing objectives. Once all these have been defined, the actual 
development of the product must be undertaken in a manner that reduces 
the time to market. 
This phase of product development is the first operational phase where time 
and money will begin to be committed by the company; the longer and more 
30 
 
complicated the process, the longer it is likely to take. The Product 
Development Process is led by a Product Development Team. This team 
consists of people from R&D, Manufacturing, Industrial Engineering, 
Quality Control, Sales and Marketing. It is often seen that delays in 
product development occur because of one or both factors listed below: 
1. There is lack of clarity on what needs to be developed 
2. There is poor co-ordination between the members of the Product 
Development Team 
 Their first task is therefore is to create a single composite document 
that will lay out what the customer wants and how the company is going to 
benefit from it, what functionality needs to be inbuilt for the customer, etc. 
3. Need for Customer Requirement Document 
We have seen that the Project Management Process has five stages which 
take the product from its inception to its final withdrawal from the market. 
In all this, there is one document that virtually holds the entire process 
together. This document lays down what each functional area (within the 
organisation) has to undertake. It also documents the commitments made in 
time and cost by each functional area. This is called the Customer 
Requirement Document (CRD). The advantages of this document are listed 
below: 
 It allows you to completely think out the product and strategy in 
advance 
 It makes sure you do your groundwork before any activity 
(commitment in terms of time and money) starts 
 It gives everyone involved an idea of the various aspects of the 
product the Product Manager is working on 
4. Contents of Customer Requirement Document 
Though we need to have a comprehensive document that must contain all the 
necessary elements, it is also important that this document is brought out 
quickly and must contain the commitments of all the stake holders in 
the Product Development Team. The reasons for this urgency are: 
 If we take too much time in getting out the CRD then it may become 
outdated since the market is moving so fast and priorities are changing 
very rapidly. 
 Also all the stake holders in the product development process i.e. R&D, 
Manufacturing, Industrial Engineering, Quality Control and Sales must 
give their inputs and commitments to time taken and costs likely to 
be incurred. 
31 
 
 Thus the development of the CRD must be an interactive process 
between all the stake holders. 
5. Development of Customer Requirement Document 
The prime responsibility for the development of the CRD is with the 
Product Manager who is functionally a part of the Marketing Department. The 
CRD can be developed in two ways: 
 The Product Manager can develop the complete document on his 
own marking the activities to be done by various other departments 
and put time frames in which he needs the product. 
 The Product Manager can create a broad overview document and 
then sit along with the other departments involved in its 
development and create the detailed document. 
In the first process, where the Product Manager makes the complete CRD 
himself, the document may be more weighted from the Marketing and Sales 
point of view, and when it reaches the other functional departments they may 
or may not agree with the possibility of creating functionalities, time and cost 
estimates specified by the Product Manager. This can thus lead to a lot of 
rework and disagreements in the team leading to delays or the final 
development of products that may not have features that the Marketing team 
was depending on to promote the product. Also since the complete document 
has to be made in detail it is likely that the Product Manager will take much 
longer to get the document ready – thus leading to the possibility of 
making a document that has lost touch with the market before it is ready. 
The other way is for the Product Manager to make a CRD quickly is to make a 
document that has separate sections with large amount of 
functionality. Each of these documents is further broken down into small well 
defined tasks. The smaller documents are created along with the people 
from the department that is going to be involved in the development of that 
function. The documents involved with each functional area are live 
documents that may continuously be updated as the product development 
takes place. This way the team is able to start the work quickly and at the 
same time keep the changing market conditions in view. The process followed 
here is: 
1. The CRD lists out all the functions and features that the product 
must have. 
2. Each of these functions must be listed by priority i.e. the highest 
priority first and then the next and so on. 
3. Now the Product Manager starts from the highest priority feature and 
breaks it down in to tasks that need to be done in order to accomplish it. 
This listing of tasks is done along with the persons who have to 
work on it. The advantage of this is that it brings in their commitment 
and ownership and the document is not one where the Product 
Manager has thrust on the other departments. 
32 
 
4. During the discussions the developergives an indication of the time 
and resources needed to complete the task. 
5. Once this is complete the Product Manager signs off with the 
developer and the signed off document is circulated within the team 
while the developer commences his task. This allows the other team 
members to understand how the development of the feature will impact 
their functional areas and make the necessary preparation to be ready 
when it comes to their functional area. For example, if the R&D team has 
circulated a signed off document giving the type of development that is 
going to be made available, the Production and Quality Control teams 
can begin to understand how they will be impacted by the new 
technology and prepare for it. 
6. The Product Manager moves onto the person/ department who will take 
on the development of the next most important task and so on this 
process carries on till all the features are accounted for. 
7. Another advantage of this process is that we can involve the customer 
at any stage of the design to get him to meet the person developing the 
feature. This is beneficial since it helps the developer get a clear 
understanding of the customer‘s needs. 
Many times, the market conditions force us to release products that are not 
fully ready. This may be due to some activities of the competition or an 
existing product of ours not doing too well in the market. This process allows 
us to launch products with the key features and add more features as 
they are developed. 
6. Strategic Advantage of a Good Customer Requirement 
Document 
This process has the following advantages over the method of a Product 
Manager making a complete CRD document and then sending it to the 
concerned stake holders for development: 
1. The Product Manager is much more closely involved with the 
development team from the beginning and so has a clear idea of what 
is possible and what is not. 
2. Since the Product Manager has prioritised the development of the 
features he can release the product even if all the features are not 
ready and can strategically keep on adding more features as time goes 
along. 
3. Even when the product is launched with a few features it does not 
create a major upheaval in the development team since they are 
developing the feature in sequence of importance. 
4. We can bring in customers to meet developers so that they can be sure 
that features desired by the customers are developed in a manner 
that is needed by the customer and not as convenient to the 
developer. 
33 
 
5. This way the customers also feel more committed to purchasing 
the product as they feel it has been developed for them. 
6. The commitments on time, etc are given by the development team and 
so they are more committed to meeting the deadlines. 
7. The Product Manager is involved in managing several small functions 
of manageable proportions. He is also in a position to decide the 
strategic launch of the product rather than having to wait for the full 
development of the product. 
8. The progress of the whole project can be measured in a more accurate 
manner. 
9. During the development process the other departments involved in the 
development, quality control, sales, and technology development can 
work together and in anticipation of each completing the task. 
However, like all processes, this also has its set of disadvantages: 
1. This process requires a lot of co-ordination on part of the Product 
Manager. 
2. It becomes very critical that the agreements generated between the 
Product Manager and the developers are circulated in time and 
appropriately amongst the whole team. 
3. In this method, unless the Product Manager and the developers agree 
with each other, it is not possible to move ahead. Hence it takes a lot of 
give and take. 
4. There is no single comprehensive document to review but many small 
ones. 
7. Use of Archived Products in Product Development 
Now we must realise that though it seems that product development is a 
simple and straight forward process it is not always that we get products that 
can be commercialised. 
There are many reasons for not commercializing products. Some are 
1. The products developed do not meet the customer’s requirement. 
Many times a customer may want a product with certain properties 
but it may not be technically feasible to get a product with desired 
features. 3M was asked by one of its customers to develop an 
adhesive with certain properties but the product developed did not 
meet the customer‘s requirements. 
2. Some products are developed as a by-product of another 
development and so have no commercial value. 
3. Some products are too expensive for current usage and cannot 
find applications today for example the use of solar cars. These cars 
are very expensive as compared to existing cars which are based on 
34 
 
cheap fossil fuel. The solar cars will find an application as fossil fuel 
becomes more expensive and global warming makes use of these cars 
more difficult. 
4. Sometimes the cost of commercialisation is very high for example 
the use of wind power was known for many years but the cost was too 
high as compared to cheap fossil fuel. However today with the 
increase in cost of fossil fuel, the possibility of its finishing in the next 
50 years or so the use of wind power is becoming more prevalent. 
 
Products that are developed but are not commercialised archived and also 
form a pool of resource which comes in handy for the development of new 
products. 
In Figure 3.0 you can see that product conceptualisation is a combination of a 
practical (consumer) need real or perceived and some natural 
phenomenon which comes from creativity, ingenuity and out of the box 
thinking. It is not always that a product developed has the necessary 
requirements for commercialisation. So these products are archived. Now 
it has been seen many times that from these archives some excellent products 
have been developed. 
Let us take the example of Post-it notes. A Post-it note is a piece of 
stationery with a re-adherable strip of adhesive on the back, designed for 
temporarily attaching notes to documents and to other surfaces: walls, desks, 
computer displays, and so forth. 
 
 
35 
 
 
 
 
Post-it® Notes were not a planned product. 
 A man named Spencer Silver was working in the 3M research laboratories in 
1970 trying to find a strong adhesive. Silver developed a new adhesive, but it 
was even weaker than what 3M already manufactured. It stuck to objects, but 
could easily be lifted off. It was super weak instead of being super strong. No 
one knew what to do with the adhesive, but Silver didn't discard it. Then one 
Sunday four years later, another 3M scientist named Arthur Fry who was a new 
product researcher with a knack for inventing things was singing in the 
church's choir. He used small strips of paper to mark his place in the hymn 
book, but they kept falling out of the book. 
He knew that Silver's adhesive did not bond permanently or leave a sticky 
mess and he soon realised that if he applied a thin coating of the glue on a 
strip of paper it would also be re-useable. He need not lose his place in his 
hymn book again 
It still took a long time and a lot of effort on the part of Art Fry and his 
accomplices to persuade 3M that their product would work. There were many 
difficulties to overcome, and at each stage of the way Fry would have to 
convince the engineers and product developers to press on and find a way to 
produce the blocks of notes 
36 
 
It was finally Introduced to the market in 1980, one year later Post-it Notes 
were named 3M's Outstanding New Product, despite the fact that at first they 
had to be given away free, to demonstrate their usefulness. 
This was ten years after Silver developed the super weak adhesive. Today 
they are one of the most popular office products available.8. Summary 
The actual process of product planning begins much before the creation of a 
Customer Requirement Document. It begins with the definition of business 
objectives by the top management and in order to fulfil these objectives the 
product management team undertakes an elaborate exercise not only for 
tracking customer requirements but also to scan competitors activities, 
technologies evolving, etc to make sure that they have the products that will 
give the organisation a competitive edge over its competitors. In this whole 
process of planning and execution it is the creation of a Customer Requirement 
Document that helps the product Managers to stay on course. This document 
assists the Product Manager in developing the product by helping him create a 
road map for the process. In addition it allows other functional departments 
who are involved in the product development understand how they are 
interlinked in the whole process of product development. The advantages of 
this document are also that it allows the product manager to plan how features 
will be released in the market to ensure that the product meets its revenue 
and profit goals. 
 
9. Your Learning 
1. What is a Customer Requirement document? What is it used for? 
2. How does having a Customer Requirement help? 
3. Why must the requirements of the Customer Requirement Document be 
an interactive process and contain commitments of all the stake holders? 
4. What process do you think the process manager must follow to make the 
CRD on his own or he must involve other departments which will be 
involved in product development? 
5. What are the contents of the Customer Requirement Document? Who is 
responsible for getting it made? 
6. What are the advantages of having a good Customer Requirement 
Document? 
37 
 
7. Take a product that needs to be developed and write how you would go 
about making a customer requirement document. 
 
10. Key Words 
1. Time to market – is the time taken to bring the product into the market 
from the time of its inception. Companies always work minimising this 
time. This helps them reduce development costs, pre-empt competition 
from getting new products into the market before them. 
2. Single Composite Document – Composite means made up of separate 
parts or elements. So a single composite document means that there is one 
single document that contains inputs from different departments but is 
comprehensive about all the activities that need to be done. 
3. Inception means from the beginning or the start. 
4. Stake Holders are all those who will be responsible for or benefit from 
an activity. 
5. Prime Responsibility means the main responsibility. This is usually 
with the person who is driving the project. 
6. Live Documents – these are documents that are continuously being 
modified along with the ground reality of the situation. This is different 
from changing a document without justification. Usually a liv document 
would be changed if say the market conditions changed dramatically or 
technology was not available for manufacture or it became 
uneconomical, etc. 
7. Sign-off – signals that some activity is complete or that an 
understanding has been arrived at. 
8. Archived Products – Archives are places where things that have no use 
or are old have been stored. So sometimes products that are developed 
but do not find use are stored. These products are the archived products. 
11. Exercises 
 
1. What are the strategic advantages of creating a good Customer 
Requirement Document? 
2. In the CRD functionality is written in order of importance. Why is this 
done? How does this benefit the company in the rollout of the product? 
38 
 
3. How does using Archived products in product development benefit the 
product development process. Does this turn out to be more cost 
effective or does it only impact time of development? 
4. Once a product manager signs of with the product developer why is it 
necessary to circulate this acceptance to all the other members of the 
product development team? How does this benefit the company? 
 
12. Further Reading 
 
1. Kahn, Kenneth B. (2001). New Product Planning. New Delhi, India: 
Response Books pg 29 – 38, 41 – 45, 
2. Mukherjee, Kaushik (2009) Product Management , New Delhi, India: PHI 
Learning Pvt. Ltd Pg 21 – 30, 73 – 76 
3. Lehmann, Donald R and Winer, Russel S, (1997) Product Management, 
Singapore, Irwin/ McGraw-Hill 32 – 34 
4. Gorchels, Linda, (2006) The Product Managers Handbook, New York, 
USA: McGraw-Hill p 90-96 
 
39 
 
6. 
 
 
 
 
7. BLOCK 2: MANAGING PRODUCTS 
 
8. Unit 4: Product Line Decisions 
9. 
10. Unit 5: Product Life Cycle 
11. 
12. Unit 6: Product Portfolio 
13. 
Unit 7: Product Pricing 
40 
 
14. Unit IV - Product Line Decisions 
 
15. Learning Objectives 
 To understand what is a ‗Product Line‘ and its relevance in Product 
Management 
 To understand what how product line can be managed. 
 To understand difference between product mix and product line 
 Concepts in product line management 
 
Structure 
1. Product Decisions 
2. Product Mix 
3. Product Line 
4. Product Line Decisions 
4.1. Withdrawing Products 
4.2. Increasing Products 
4.3. Product Contribution 
5. Summary 
6. Your learning 
7. Key Words 
8. Exercises 
9. Further Reading 
 
 
1. Product Decisions 
Decisions regarding the product, price, promotion and distribution channels are 
decisions on the elements of the "marketing mix". We can say that decisions 
about the product are amongst the important ones since they affect the 
market planning of the company. If the wrong products are introduced in the 
market it can have catastrophic consequences for the company. For example 
computers may be totally unsuitable for rural areas where electricity is not 
available and where incomes are low; and the attempt to sell products to 
customers without considering their cultural values and needs both can have 
negative consequences on sales and achievement of business objectives. 
However today‘s markets are a complex mix of aspirations and product 
requirements and hence decisions are not so simple since the customer‘s 
requirement lies somewhere between his aspirations and his need for a 
product. Hence the marketer tends to introduce several products in his desire 
to meet the aspirations and needs of his target market. 
41 
 
Product modification decisions are based on how much an organisation has to 
stay close to a standardised product (just by extending it) or how much it has 
to move towards innovation (by making something new). So between 
extension and innovation there is a whole spectrum of possibilities for different 
products. The closer a company‘s products stay to extension the lower the cost 
and the closer it gets towards innovation the higher is the cost of introduction 
or decisions. 
Product modification decisions revolve around decisions regarding the physical 
product (size, style, specification, etc.) and product line management. 
 
2. Product Mix 
The product mix of a company is defined as the total set of products offered by 
it. The product mix consists of product lines and individual products. For 
example, all the courses a college offers makes up its product mix; courses in 
the marketing department make a product line; and the basic marketing 
course is an individual product. Product decisions at these three levels (product 
mix, product line and product) are generally of two types: 
i. Decisions that involve width and depth of the product line and 
ii. Decisions that involve changes in the product mix occur over time – 
adding, removing products or enhancing the range (width). 
The depth of the product mix refers to the number of product items offered 
within each line; the width refers to the number of product lines a company 
has. For example, Table 1 illustrates