Marketing: Real People, Real Choices 3rd edition 10- 1©2003 Prentice Hall, Inc

Chapter 10

Managing the Product

Marketing: Real People, Real Choices 3rd edition 10- 2©2003 Prentice Hall, Inc

Chapter Objectives_1

Explain the different product objectives and strategies a firm may choose

Explain how firms manage products throughout the product life cycle

Discuss how branding creates product identity and describe different types of branding strategies

Marketing: Real People, Real Choices 3rd edition 10- 3©2003 Prentice Hall, Inc

Chapter Objectives _2

Explain the roles packaging and labeling play in developing effective product strategies

Describe how organizations are structured for new and existing product management

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Objectives and Strategies for Multiple Products

Firms must plan for its entire product portfolio

– Product line strategies

– Product mix strategies

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Product Line Strategies

A product line is a firm’s total product offering designed to satisfy a single need for target customers (e.g., P&G’s line of dish detergents: Dawn, Ivory, Joy)

Possible line strategies:

– full line versus limited line– line stretch: upward, downward, or two-way– filling-out versus contracting

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Product Mix Strategies

A product mix is a firm’s entire range of products (e.g., Gillette offers shaving products, deodorants, writing instruments, toothbrushes…)

Strategic mix decisions usually relate to the width of the product mix - how many different product lines are produced by the firm

Marketing: Real People, Real Choices 3rd edition 10- 7©2003 Prentice Hall, Inc

Quality as a Product Objective

Product quality is the overall ability of a product to satisfy customer expectations

Dimensions of product quality

– durability– reliability– precision– ease of use– product safety– aesthetic pleasure

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Key Aspects of Quality

Level

– determined by comparison with other brands in same product category

Consistency

– customers experience the same level of quality in product time after time

Marketing: Real People, Real Choices 3rd edition 10- 9©2003 Prentice Hall, Inc

Marketing Throughout the Product Life Cycle

The PLC explains how features change over the life of a product

Marketing strategies must change and evolve as a product moves through the PLC

The PLC relates to a product category

Marketing: Real People, Real Choices 3rd edition 10- 10©2003 Prentice Hall, Inc

Introduction

Full-scale launch of new product

Sales are low, high failure rate

Little competition

Frequent product modification

Limited distribution

High marketing and product costs

Focus on awareness and primary demand

Intensive personal selling to channel members

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Growth

Sales grow at an increasing rate

Many competitors enter market

Profits are healthy

Promotion emphasizes brand advertising and comparative ads

Wider distribution

Toward end of growth stage, prices fall

Sales volume creates economies of scale

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Maturity

Sales continue to increase but at a decreasing rate

Marketplace is approaching saturation

New models emphasize style, not function

Product lines are widened or extended

Marginal competitors drop out

Heavy promotions - sales promotions

Prices and profits fall

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Decline

Signaled by a long-run drop in sales

Rate of decline is governed by how rapidly consumer tastes change or how rapidly substitute products are adopted.

Falling demand forces many out of market

Few specialty firms left

Marketing: Real People, Real Choices 3rd edition 10- 14©2003 Prentice Hall, Inc

Branding Decisions

A brand is a name, term, symbol, or any other unique element of a product that identifies one firm’s product(s) and sets it apart from competition

Brands should

– be memorable– have a positive connotation– convey a certain image

Marketing: Real People, Real Choices 3rd edition 10- 15©2003 Prentice Hall, Inc

Brand Equity

Brand’s value to its organization

Brand equity provides customer loyalty, perceived quality, brand name awareness, competitive advantage

Brand equity can be used to establish brand extensions

– Alka Seltzer, Alka Seltzer Morning Relief

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Branding Strategies

Individual brands versus family brands

National and store brands

Generic brands

Licensing

Co-branding

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Packaging and Labeling Decisions

Packaging functions

Effective packaging designs

Labeling regulations

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Management of Existing Products

Brand Manager - responsible for positioning of brands, developing brand equity

Product Category Managers - responsible for coordinating the mix of product lines within the more general product category

Market Managers - focus on customer groups rather than on the products made by the firm