Chapter 10 Operations (production)

Production

• production :
• -the process and method involved in building a product
• - 'transformation process'. Takes tangible inputs (raw materials) and intangible inputs (ideas, knowledge) into goods and services(finish products).

Product Management Systems

• Production Management System monitor and controls the product process.
• (to ensure that the inputs are organised,
• production processes are operating effectively and efficiently
• n the outputs meets the quality standards and customer requirements. )
• Goal : produce goods and services at the
• right quality, right quantity, at right time, at minimum cost

Purpose of product management

• 1) Achieve Business Goal
• PM helps business to produce products that meet customer needs at an affordable price at minimised cost. This ---- increase sales & generate profit.
• 2) Build +ve public image
• If customers are receiving high quality products(not faulty/x defects) at an affordable price -- satisfied, happy. Then they'll create free advertisement -- 'word to mouth' -- satisfied customer tell others abt the business or product and come back to business and buy. This builds a good reputation and public image and it creates long-term success.
• 3) Stay competitive
• Meeting customers need, satisfying them, minimise cost, increasing sales and profit allows business to remain competitive in industry. More income can be generated to used for activities such as promotion, advertisement, market research. This also gives business competitive advantage

Stages of product development

• Stage 1 : Product ideas
• research existing customers, target market, technology and competitor- find out unmet customer needs
• Stage 2 : Evaluate the ideas
• Make a list of possible product ideas and evaluate them with product development team or with ppl from different range of functions in the business.
• Eg : finance, sales..team
• idea can be evaluated in terms of its marketing potential, whether the business is able to produce it efficiently.
• If there is time n money, staff are able to sell it.
• look at expected sales,costs and profits for the ideas.
• discuss pros and cons n choose the best idea

Slide 5

• 3. Product Concept Evaluation
• more details added to the idea
• Eg : possible target markets, colors, design, name
• seek feedback frm customer or employee
• run focus group - gather feedback abt the idea, possible product names n advertising strategy
• Analyze market to identify competitors selling similar products // substitutes
• 4. Prototype Testing
• once the best idea is chosen, it can be develop to a prototype
• staff analyse and test the product and give feedback
• what ppl like can(fb) be used for advertising and promotions
• criticism can be addressed(solve) through improvements to the prototype

Slide 6

• 5. Market testing
• When prototype is refined, market testing can be carried out
• small amount of product is manufactured
• samples can be distributed to customers on database or through newspapers, magazines.
• Marketing testing is to increase interest and desire before full product launch
• 6. Product Launch
• Inventory ready for customer orders and distribution to retailers
• use promotional strategies to generate interest, desire and demand for the product
• new products need a more extensive strategy bcuz customers need to be educated and persuaded abt new, unfamiliar products and its benefits