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ASSIGNMENT 1ST SEMESTER : PRODUCT MANAGEMENT (PM)
PRODUCT MANAGEMENT
(PM001)
CHAPTERS COVERED
: CHAPTERS 1, 3 - 6
DUE DATE
: 3:00 p.m. 19 March 2013
TOTAL MARKS
: 100
CASE STUDY
: BIC
INSTRUCTIONS TO CANDIDATES FOR COMPLETING AND SUBMITTING
ASSIGNMENTS
The complete ‘Instructions to Students for Completing and Submitting Assignments’ must be
collected from any IMM GSM office, or the relevant Student Support Centre or can be downloaded
from the IMM GSM website. It is essential that the complete instructions be studied prior to
commencing your assignment. The following points highlight only a few important notes.
1. You are required to submit ONE assignment per subject.
2. The assignment will contribute 20% towards the final examination mark, and the other 80% will
be contributed by the examination, however, the examination papers will count out of 100%.
3. Although your assignment will contribute towards your final examination mark, you do not have
to earn credits for admission to the examinations; you are automatically accepted on
registering for the exam.
4. Number all the pages of your assignment (e.g. page 1 of 4) and write your name and surname,
student number and subject at the top of each page.
5. The IMM GSM requires assignments to be presented in a typed format, on plain A4 paper.
Unless otherwise specified, this assignment must be completed within a limit of 1500 words,
excluding the bibliography. Students who exceed the word limit may find that only part of the
submitted assignment will be marked.
6. A separate assignment cover, which is provided by the IMM GSM, must be attached to the
front of each assignment.
7. Retain a copy of each assignment before submitting, in case the original does not reach the
IMM GSM.
8. The assignment due date refers to the day up to which assignments will be accepted for
marking purposes. The deadline is 3:00 p.m. on 19 March 2013. Late assignments will be
accepted, but 25 marks will be deducted from the maximum mark if received after 3:00 p.m.
on 19 March 2013 and up to 5:00 p.m. the following day, after which no assignments will be
accepted.
9. If you fail to follow these instructions carefully, the IMM Graduate School of Marketing cannot
accept responsibility for the return of the assignment. It may even result in your assignment
not being marked.
Results will be available on the IMM GSM website, www.immgsm.ac.za, on Friday, 3 March 2013.
Assignment: 1st Semester 2013
© IMM Graduate School of Marketing
PM / PM001
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Specific instructions:
1. Answer ALL the questions in detail.
2. Use your own words to answer the questions!
3. Read each question carefully to determine exactly what is required before
attempting the answer.
4. Answers must be set out in a systematic way under appropriate headings and
sub-headings. Number your answers clearly.
5. Do not simply give theoretical discussions. Practical application is essential
for all questions and should form the bulk of your answers.
6. Take note that 10 marks are allocated to the presentation and layout of your
assignment.
7. Make sure that you give a bibliography at the end of the assignment and
provide references in the body of your answers where you have referred to
other sources. Use the correct referencing method (Harvard system).
8. All answers must be based on the attached case study on BIC or the ‘Treats
in trouble’ article as indicated in the various questions.
9. Refer to BIC’s website (http://www.bicworld.com/) for more information on the
product in the case study. (Questions 1, 3-4).
10. Refer to the following website to download the article you will need to consult
when answering Question 2: http://www.supermarket.co.za/flipbooks/Super
market_Retailer/May%202012/index.html (pp. 29-32). The article is also
included after the case study in this document.
.Answer all of the following questions after having read the attached case
study on BIC and the ‘Treats in trouble’ article. You are also advised to
research the companies in question in more detail to enable you to give more
insightful answers.
QUESTION 1
[15]
Refer to the BIC case study in order to answer this question.
The kinds of tasks product managers perform are highly related to how marketing is
organised.
Required:
Practically describe the three organisational structures for marketing that can be
considered for use by BIC. In your practical discussion, you must clearly identify the
role and tasks of the product manager under each organisational structure and show
how BIC is structured according to the information in the case study. Give your
opinion (with reasons) on which structure is best suited for BIC. Make sure that you
also clarify why the other structures are not appropriate.
Assignment: 1st Semester 2013
© IMM Graduate School of Marketing
PM / PM001
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QUESTION 2
[35]
Refer to the article entitled ‘Treats in trouble’ in order to answer this question. The
article looks at the state of the sweets and confectionary category in the South
African market. It outlines the key trends in the category and the problems it is
facing.
Required:
Using the information in the article, conduct a category attractiveness analysis of
the sweets and confectionary category in the South African market. Your analysis
should focus only on the aggregate market factors (18 marks) and the category
factors (17 marks).
You must not discuss any theory in your answer. Your entire answer must be
practical application. Make sure that you address all aspects and explain the
implications of the points made in your analysis.
[Hint: Make sure that you discuss your answer from the perspective of how each
factor influences the operations and marketing of products in the category and thus
the attractiveness of the category].
QUESTION 3
[20]
In customer analysis, certain key questions need to be asked by the product
manager in order to ensure he/she has an in-depth understanding of the customer
and how they make their purchase decisions.
Required:
Using BIC as your point of reference, explain how a product manager would go about
analysing ‘what customers buy and how they use it’.
[It is important that you outline the theoretical issues and then give a detailed
practical application.]
QUESTION 4
[20]
Companies need to continuously develop their product offerings in order to remain
competitive in the markets in which they operate.
Required:
Write an essay on the topic of the new product development process where you
clearly explain what the process is and describe the steps in the process.
Throughout your answer you should apply your discussion to the development of
BIC’s Cristal Gel pens by explaining how it would have passed through the various
stages of the process. Make assumptions where necessary.
Assignment: 1st Semester 2013
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[Note: It is essential that you conduct further research on this topic when answering
this question. You will not find sufficient information in the prescribed textbook.
Consult additional textbooks, read articles, conduct Internet searches, and use any
other resources at your disposal when researching this topic. Use the correct
referencing method.]
PRESENTATION
[10]
ASSIGNMENT TOTAL: 100
Assignment: 1st Semester 2013
© IMM Graduate School of Marketing
PM / PM001
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CASE STUDY: BIC
Read the case study on BIC carefully before attempting to answer questions
1,3 & 4. This is an unfamiliar product to many of you so it is advisable to research it
further – this is part of the learning process.
Source: Adapted from The Times 100. Honour the Past … Invent the Future. [Online] Available at:
http://businesscasestudies.co.uk/bic/honour-the-past-invent-the-future/challenges.html [Accessed: 28
May 2012].
HONOUR THE PAST – INVENT THE FUTURE
BIC was founded in 1950 by Marcel Bich with the introduction of the first high
quality ballpoint pen at an affordable price. In 1975 BIC launched the first onepiece shaver and become a market leader within that sector too.
In the early days, BIC concentrated on a core range of products which mainly
included: BIC Cristal® and Orange Ball Pen and the Classic Shaver. In the 1990s
the company realised it needed to develop its product range to meet changing
consumer needs and to compete with new competitors entering the writing and
shaver categories.
CHALLENGES
In the highly competitive modern global market place, no organisation can afford to
stand still. As global markets are so competitive, large companies can no longer
produce hundreds of different products in lots of different product categories. That
approach is inefficient and spreads resources too thinly.
Big companies recognise the importance of focusing on their power brands, i.e. on
those lines in which they have the greatest competitive advantage relative to rivals
and which offer opportunities for profitable growth. It pays firms to:
 invest in these products and concentrate resources on them
 support them with sufficient marketing, product development, advertising and
promotional efforts.
In recent years, BIC has reaffirmed that its ongoing success depends on key factors.
Assignment: 1st Semester 2013
© IMM Graduate School of Marketing
PM / PM001
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ORGANISATIONAL EFFICIENCY
BIC has simplified its product range. This has involved focusing from 9,000 SKUs to
150 products in customer-relevant packaging, and reorganising itself in the process.
Production has been rationalised to a limited number of 'super-factories’ that are the
sole sites for manufacturing particular products for global distribution.
This way of operating creates huge economies of scale whereby massive quantities
can be produced at very low unit cost. For example by operating continuous flow
production, where the shaver factory's production line runs for 24 hours every day,
using highly automated machinery that minimises labour costs.
CUSTOMER FOCUS
BIC focuses on two sets of customers:
 the retailers to whom it sells directly
 the end consumers that the retailers supply.
BIC carries out detailed market research to discover the wishes of these two groups
e.g. the best mix of products, delivery patterns and promotions to support its products
in the shops for retailers as well as final consumers' expectations and requirements
for BIC products.
In one city in Poland, for example, BIC supplies not only a 24hr/7day supermarket
but also 100 small kiosks. To do this well, BIC had to identify the needs of both
retailers and consumers. It then had to satisfy them.
INNOVATION
Many BIC trademarks are well known e.g. BIC,
BALLOGRAF, SHEAFFER, CONTÉ, TIPP-EX, BIC
WITE-OUT. However, as well as building on the
success of existing brands constantly improving the
quality of the core products, the company is constantly
developing new products to meet consumers'
expectations and aspirations. For example, in 2002,
20 per cent of the company's stationery sales came
from new products and line extensions.
In a carefully controlled programme, BIC designs and launches new products that
offer greater value-added technology. For example, as mentioned earlier, the BIC
Assignment: 1st Semester 2013
© IMM Graduate School of Marketing
PM / PM001
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Cristal is the world's leading selling pen. The number one growing category in writing
instruments is gel ink. It is essential that the company offers products with gel ink.
BIC has combined these two ideas to create the BIC Cristal pen (the highest quality
pen of its kind, and thanks to BIC's efficient methods available at an affordable price)
offering the smooth writing of gel pens at a BIC price.
Conversion from the traditional point-and-ink system to the new Smooth Gel Ink
system (offering greater writing comfort) involved significant modifications in
manufacturing processes for inks and colourings in addition to re-tooling the
machines that make the points. These changes required two years of research and
a further year to implement in pilot plants (in France and the Americas), thus
reflecting the large investments made by the Group in its core categories.
THE BOSTON MATRIX AND BIC PRODUCTS
Multi-product businesses like BIC are aware of how products in their entire portfolio
contribute to the overall growth of the business. Established profitable lines make a
vital contribution that enables a company to invest in the development and promotion
of new lines.
The Boston matrix can be applied to BIC products:
 The Cristal Ball Pen and Classic Shaver are popular and well established
products with very high unit sales. BIC produces them on a large scale. They
provide excellent cash profits for the company.
 The Cristal Grip and Cristal Gel Pens, and Twin Lady shavers are stars with
well established growth patterns. For example, the Twin Lady filled the gap in
the market for shavers for women.
 Problem Children that have recently entered their respective markets include
Cristal Colours and Cristal Pocket Scents in the pen market, and Comfort 3
and Soleil in the shavers market. Currently BIC is investing in these products.
Over the next two or three years the company will decide whether these
products have succeeded (moved into the star category) and warrant
continued support. Products such as Soleil (a shaver for women) are rapidly
moving into the star category.
 Of course, some products fail to take off sufficiently and/or go into decline. The
'Tough Beard' shaver has not warranted further development and BIC has
taken it out of production.
DEVELOPING THE PRODUCT RANGE
The Cristal range of pens demonstrate how to inject new life into a product range:
 BIC's Cristal Ball pen was launched in 1951. It has over 30% market share
and is the UK's best-selling ball pen.
 In 1964 BIC launched BIC Orange. This is a fine-point version of the Cristal
pen, easily recognised by its orange barrel.
 In the 1990s, as the Cristal and Orange Ball pens became more mature and
encountered fierce competition from lower priced brands, BIC invested in
developing the Cristal range to attract new users and to differentiate itself from
the competition.
Assignment: 1st Semester 2013
© IMM Graduate School of Marketing
PM / PM001
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This led to the launch of a range of new products:





Cristal Grip, for more comfort
Cristal Colours, for fashionable colours
Cristal Pocket, for a more convenient size
Cristal Pockets Scents, for fun and fruity inks
Cristal Gel, for smoother writing.
By continually adding to the range, BIC manages to inject new life into the product
life cycle of the overall range.
BIC now offers a full range of Cristal pens using both ballpoint and gel ink
technology. The range's development has also helped to support the enhancements
of the core brand, and each year sales of Cristal pens increase.
THE PRODUCT LIFE CYCLE AND PROMOTIONAL ACTIVITY
BIC analyses its products, and promotes and supports these in line with their stage in
the product life cycle. For example, BIC Cristal and the Classic shaver have a long
life cycle and although they have had technological improvements over the years and
are produced using more advanced manufacturing techniques, the style and design
of these products have not changed. They are still recognisable worldwide.
Initially, when these products were launched, promotional activity would have
focused on generating awareness and encouraging consumers to trial the products.
Now that these products have become well-established icons, the promotional
emphasis is on rewarding loyal customers who continue to buy these products.
The illustration shows the way in which promotional activity is tailored to stages in the
product life cycle.
With Cristal Gel, BIC carried out a large amount of below the line activity. To build
awareness of the new product, BIC supplied existing Cristal Ball pen users with
Cristal Gel samples through special promotional packs and other sampling
campaigns to office users. This was supported by advertising and direct marketing.
During a product's growth period, BIC continues to use market research data to help
it better understand market developments and consumer requirements. It also
continues to support the product so that more and more consumers try it out and are
converted into regular users. At this stage, advertising and special offers encourage
new users to try the product.
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As a product moves towards maturity, BIC's marketing experts need to identify ways
of injecting new life into it. They must also identify new product developments that
can meet similar consumer needs. This explains why, for example, BIC has
developed extensions to the Cristal range.
Once a product has saturated a market, sales will stagnate. However, it is important
to continue to support cash cows because they play a vital role in injecting profits that
sustain new product development.
Once a product has moved into decline, a company like BIC will look to replace it
with new products that meet existing and evolving consumer needs.
BRAND DEVELOPMENT
BIC has invested heavily in brand development, to strengthen the recognition of the
brand and its reputation among consumers. BIC has also developed co-branding
operations with Disney, and produces a range of writing instruments (mechanical
pencils, etc) that feature Disney characters, and targeted to young children, a
colouring range under the Disney Magic Artist BIC brand.
FUNDAMENTAL VALUES AND COMPANY STRUCTURE
A company's values are the guiding principles that determine the way it behaves.
BIC's values relate to its products, which ensure they are:
 functional: designed to perform a specific function well e.g. to draw a line,
produce a flame, shave hair. The key to achieving functionality is to adopt the
most appropriate design, engineering and technology.
 affordable: achieved by using appropriate design, materials production and
distribution channels.
 universal: capable of being used by anyone worldwide e.g. the ballpoint pen,
the pocket lighter, the one-piece shaver.
Building on these fundamental values, BIC has established three core categories for
products, based on a global range, designed for mass appeal. BIC then helps local
retailers to select the products that best suit their own customers' needs from this
range.
Each of the three product categories is managed by a Category General Manager,
who has the overall responsibility for the marketing, development, and manufacturing
worldwide. In recent years manufacturing operations have been simplified so that
huge outputs can be produced from super-factories that serve very large
geographical markets.
Product distribution is then organised by continent, with country managers reporting
to their continental manager. The organisation thus has a matrix structure based on
two main lines of communication - (1) by product category, (2) by geographical
region. This means that an employee working, say, in a pen manufacturing plant in
France would be accountable both within the Western European division and the
stationery category.
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This matrix structure allows combining the benefits of a strong product expertise,
together with strong operational structures per geographic area.
CUSTOMERS/CONSUMERS
BIC's customers (retailers) are not the final consumers who buy from retailers. The
Group has therefore built up strong relationships with its retailers to ensure that its
products are placed in the most attractive and suitable shop locations, and that the
products are attractive and eye catching. This suits both parties; retailers want
products to sell well too.
Today, markets in most advanced economies are characterised by fewer, larger
retailers and especially supermarkets that want sales of mature product categories
like pens and shavers to continue growing. BIC supports retailers by innovating to
stimulate growth and extend full product lifestyle providing bright, eye-catching
displays of attractive products.
SEGMENTATION
When marketing a product category, firms need to identify the different market
segments. Segmentation involves identifying sets of characteristics that distinguish
particular groups of customers from others. For example this may be based on:
 Demographics, i.e. to divide the population into groups based on age, gender etc.
BIC uses this approach to some extent, recognising that different retailers appeal
to different types of consumer based on age profiles and income, and that
different groups of end consumers seek different products e.g. male and female
shaver requirements. Promotion, advertising and presentation of products are
therefore tailored to these differences.
 Usage, in addition to its world-leading range of pocket lighters, BIC introduced
BIC Megalighter designed to light BBQs and BIC Megalighter for candles in 2004.
BIC also uses a segmentation approach looking at the behaviour or needs of
consumers. For example, BIC's research into its stationery product category shows
that there are three distinct types of writing instrument shopper.
1. Best value for money - This type is typically bought by offices and households
that have writing instruments in virtually every room. Everyone is allowed to use
any available pen, so there's no great problem if one is misplaced. Households
tend to seek lower priced pens, and regularly make new purchases of
assortments of writing instruments based on current needs.
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2. Seeking specific benefits - Here consumers are looking for a more personalised
item; something they regard as 'my pen'. It will be kept in a private place
belonging to that individual, who may be reluctant to let anyone borrow it. Buying
decisions will typically take longer, and involve careful consideration over choice.
Key features looked for will include the pen being comfortable to hold and its
capacity for producing smooth, writing that reflects the individual e.g. by colour or
handwriting style. Marketing activity therefore needs to focus on these more
sophisticated individual needs.
3. Impulse buy - Impulse buys are unplanned. Innovative designs will attract this
segment, largely because the consumer is buying for pleasure. Purchasing in this
segment is far more emotional and so the skilful marketer will seek to create
'objects of desire'. Attention grabbing Point of Sale displays are essential to
stimulate impulse buys.
BIC aims to create a balanced product portfolio, including:
 reliable, value for money products for regular household purchasers
 premium high quality products for the consumer that wants 'something special'
 novel, attractive products, sometimes with a fairly short life cycle.
CONCLUSION
BIC sustains its leading position by communicating and adhering to some
fundamental business principles and practices.
By focusing on its three product categories (stationery, lighters and shavers) and by
identifying the various market segments the company is able to produce relevant
products, some of which combine tried and tested products e.g. the BIC Cristal, and
others that are genuinely innovative e.g. BIC Cristal Gel pens.
At the same time, BIC looks to move into new growth areas e.g. triple blade shavers,
BBQ lighters and kayaks. In this way BIC is able to live up to its aim to "honour the
past while inventing the future".
ARTICLE DOWNLOAD
Read the following article before answering Question 2. A copy of the article can be
found at the following link:
Assignment: 1st Semester 2013
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Durham, L. Treats in trouble? [Online] Supermarket & Retailer, March 2012, pp. 2932. Available from:
http://www.supermarket.co.za/flipbooks/Supermarket_Retailer/May%202012/index.ht
ml [Accessed: 5 November 2012]
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