Transcript Chapter 10 Product Issues in Marketing Channel Management

Chapter 10
Product Issues in
Marketing Channel Management
Ch. 10: Major Topics
10
1. Marketing Mix in Channels
2. Product
3. Interface between Marketing Channel and Product**
1. New Product Launch
2. Product Life Cycle
3. Strategic Product Management
- Product Strategies**
The Marketing Mix
The means by which
product, price, promotion
and place variables can
be assembled to meet
channel needs.
3
The Product Ingredient of Marketing Mix
• Product:a unique bundle of tangible and
intangible attributes offered en masse to
customers.
1. Fusion of attributes
2. Value satisfaction
3. Product evolution
4
Fusion of Attributes
• Tangible attributes
• Intangible attributes
– Often more important
– Marketing Channels (When is this
important?)
5
Value Satisfaction
• Perception of benefits derived from
owning or consuming a product.
– Assess customer value
– Provide customer value
– Communicate customer value
• Ex) VARs in computer industry
6
Product Evolution
• Core Product
 Actual Product
 Augmented Product*
• Product Evolution
Channel Evolution
Ex) PC industry; Movie
industry
7
Levels of Product
Augmented
Product
Installation
Packaging
Brand
Name
Delivery
& Credit
Quality
Level
Core
Benefit
or
Service
Features
AfterSale
Service
Design
Warranty
Actual
Product
Core
Product
Product-Channel
Management Interfaces*
1. New product planning
& development
2. The product life cycle
3 Major
areas of
Product-channel
management
3. Strategic product
management
10
I. New Product Planning*
1. What input, if any, can channel members provide
into new product planning?
2. What has been done to assure that new products
will be acceptable to the channel members?*
3. Do the new products fit into the present channel
members’ assortments?*
4. Will the product cause the channel members any
special problems?
10
1. Encouraging Channel Member Input
Solicit ideas for
new products.
Gather feedback
on product size
or on packaging.
Solicit feedback
during the test-marketing
or commercialization stage.
10
2. Member Acceptance of
New Products
Determining Factors
• How the product will sell
• Whether the product is easy to stock & display
• Whether the product will be profitable*
Ex) How to increase reseller acceptance?
10
3.Adding Products to
the Reseller’s Product Assortment
Key Considerations:
Will existing channel members view the new
product as appropriate to add to their assortments?
Will channel members feel competent
to handle the new product?
Ex) Vitamin Water Case  New product category
10
4. Trouble-Free New Products
Care in new product planning
=
New product problems
10
II. Product Life Cycle and
Marketing Channel*
10
Sales
($)
Sales curve
Introduction
Growth
Profit curve
Maturity
Decline
Time
Introduction Stage and
Marketing Channel
1. Recruit sufficient number of channel
members for adequate market coverage
2. Assure adequate supply on channel
members’ shelves
10
Growth Stage and Marketing Channel
1. Assure sufficient number of channel member
inventories for adequate market coverage
2. Monitor the effects of competitive products
on channel member support
10
Maturity Stage and Marketing Channel
1. Extra emphasis on motivating channel members
to mitigate competitive impact
2. Investigate possibility for changes in channel
structure to extend maturity stage & possibly
foster new growth stage
10
Decline Stage and Marketing Channel
1. Phase out marginal channel members
2. Investigate impact of product deletion
on channel members
10
10
III. Strategic Product Management
Successful product strategies depend on:
• Product quality, innovativeness, or
technological sophistication
• Capabilities of managers overseeing
product line
• Firm’s financial capacity & willingness to
provide promotional support
• Channel members’ role in implementing
product strategies*
10
Product Strategy Issues*
1. Product differentiation
2. Product positioning
3. Product line expansion & contraction
4. Trading up & trading down
5. Product brand strategy*
Product Differentiation*
10
Creating a differential product involves getting
consumers to perceive a difference.
Implications for channel management:
• Select & help develop members who fit the
product image when product differentiation strategy
is affected by who will be selling the product.
• Provide retailers with the kind of support needed
to properly present the product when this strategy is
influenced by how the product is sold at retail.
Ex) Fashion Apparel industry in Japan
Product Positioning
10
The manufacturer’s attempt to have consumers
perceive the product in a particular way relative to
competitive products
Implications for channel management:
•Consider interfaces between the product positioning
strategy and where the product will be displayed and
sold before the strategy is implemented.
• Elicit retailer support before attempting to implement
strategy.
• ex) Vitaminwater positioning; NES positioning
Product Line Expansion & Contraction
10
Manufacturers often engage in both
expansion and contraction simultaneously.
Implications for channel management:
• Difficult to balance between channel members’
Satisfaction with current product line & channel member
support for reshaped product lines
• Channel members are making increasing demands on
Manufacturers to have the right mix of products
 Retailer Power & Category Management
Trading Down, Trading Up
Adding lower-priced products or product lines,
or higher-priced products or product lines,
to a product mix
Implications for channel management:
• Can existing channel members provide adequate
coverage of high-end or low-end market segments?
Ex) Lexus of Toyota; Apple Stores
• Do channel members have confidence in
the manufacturer’s ability to successfully market the
trade-up or trade-down product?
10
Product Brand Strategy
When manufacturers sell under both national and
private brands, direct competition with channel members
may result
Implications for channel management:
• Do not sell both national & private brand versions
of products to the same channel members.
• Sell national and private brand versions in
different geographical territories or physically vary
products.
•Dealing with Private Brand issue*
10