chapter 9 manage the product. copyright 2009 pearson education, inc. publishing as prentice hall9-2...

Chapter 9

Manage the Product

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall9-2

Chapter Objectives

Explain the different product objectives and strategies a firm may choose

Explain how firms manage products throughout the product life cycle

Discuss how branding strategies create product identity

Explain how packaging and labeling contribute to product identity

Describe how marketers structure firms for new and existing product management


Real People, Real Choices: Decision Time at Petters Group Worldwide

What should the Petters Group do about Polaroid?– Option 1: Offer Polaroid a larger percentage

of the firm’s revenues and continue as a licensee

– Option 2: Acquire a new brand to replace Polaroid in the consumer electronics line

– Option 3: Buy the Polaroid Corporation


Product Planning:Using Objectives to Decide Strategy

Firms that plan well succeed– Product planning is part of the firm’s tactical

marketing plan and involve decisions about benefits, features, styling, branding, labeling, and packaging

Today, successful product management is more important than ever– Products are created, grow, reach maturity, and

decline at faster and faster rates of speed Effective product-related objectives must be

measurable, clear, unambiguous and feasible


Using Product Objectives toDecide on a Product Strategy

Objectives and strategies for individual products:– Successful introduction of new products– Breathing new life into mature products while

maintaining brand personality


Objectives and Strategies for Multiple Products

Product planning means developing product line and product mix strategies– Product line:

Firm’s total product offering designed to satisfy a single need or desire of target customers

– Product mix: The total set of all products that a firm offers for sale


Objectives and Strategies for Multiple Products

Product-Line Strategies– Full-line vs. limited-line strategies– Upward, downward, or two-way line stretch – Filling out or contracting a product line

Product-Mix Strategies– Width of product mix:

The number of different product lines produced by firm


Quality as a Product Objective

Product quality as an objective: – Product quality is the overall ability of a

product to satisfy customer’s expectations Total Quality Management (TQM):

– Company-wide dedication to the development, maintenance, and continuous improvement of all aspects of the company’s operations

– Uniform ISO quality standards exist to offer guidance


ISO Quality Standards

ISO 9000: – Voluntary standards for quality set by

International Organization for Standardization ISO 14000:

– Concentrates on environmental management Six Sigma methodology:

– Process allowing no more than 3.4 defects per million (getting it right 99.9997% of the time)


Adding a Dose of Quality to the Marketing Mix

Product: improve customer service Place: involve suppliers and customers

in improving on-time delivery Price: lower costs and improve service

at same time Promotion: give customers information

when they want and need it (not when it’s convenient for firm)


Dimensions of Product Quality

Degree of pleasure

Product safety Ease of use Satisfies needs

Durable Reliable Precision Versatile

These factors contribute to the level and consistency of product quality


Marketing Throughout the Product Life Cycle

Product life cycle: The way products go through four distinct stages from birth to death— introduction, growth, maturity, and decline


The Introduction Stage

First stage in the product life cycle, in which slow growth follows the introduction of a new product in the marketplace – The goal during introduction is to get first-time

buyers to try product– The firm does not usually make a profit during

this stage


The Growth Stage

Second stage in the product life cycle, during which the product is accepted and sales rapidly increase– The goal is to encourage brand loyalty – Firms introduce product variations to attract

market segments and increase market share– Advertising is heavy to counter new

competition


The Maturity Stage

Third and longest stage in the product life cycle, during which sales peak and profit margins narrow – Competition grows intense – New features are added to the product– The firm resorts to price reductions and

reminder advertising


The Decline Stage

Final stage in the product life cycle, during which sales decrease as customer needs change– Market as a whole begins to shrink, profits

decline, fewer product variations exist, and manufacturers begin to pull out entirely

– Firm’s major decision is whether or not to keep the product


Creating Product Identity:Branding Decisions

Brand: A name, term, symbol, or any other unique element that identifies one firm’s product and sets it apart from the competition– Brand marks (Nike Swoosh) and trade

characters (Keebler Elves) are part of the branding process


Brand Names

A “good” brand name:– Creates a positive, memorable connotation– Positions a product by conveying an image

or personality (Ford Mustang) or by describing how it works (Weedeater)

– Is easy to say, spell, read, and remember– Fits the target market, product benefits,

customer’s culture, and legal requirements


Trademarks

Trademark is the legal term for a brand name, brand mark, or trade character– Trademarks legally registered by a

government obtain protection for exclusive use in that country

– ® is the trademark symbol used in the U.S.– Common-law protection occurs when the firm

has used the name and established it over a period of time


The Importance of Branding

Brand equity: – A brand’s value to its organization over and

above the value of the generic version of the product

Brand meaning: – The beliefs and associations a consumer has

about the brand


The Importance of Branding

Brand equity provides competitive advantage– Brands with strong equity capture can hold

onto a larger share of the market – Brands with strong equity sell at prices with

higher profit margins Brand extensions:

– New products sold with the same brand name


Branding Strategies

Individual brands vs. family brands– Family brands provide an umbrella under

which multiple products can be marketed (Example: Sunbeam)

National vs. store brands– Store brands (private label brands) are

exclusive to a given retailer

Generic branding


Branding Strategies

Licensing: – One firm sells the right to another to use a

legally protected brand name for a specific purpose and for a specific period of time

Co-branding: – Two brands combine to create a new product,

providing greater recognition or other strengths than either could achieve alone

– Ingredient branding is increasing


Creating Product Identity:The Package and Label

Package: – The covering or container for a product that

provides product protection, facilitates product use and storage, and supplies important marketing communication

Universal Product Code (UPC): – Set of black bars or lines printed on the

side/bottom of most items sold in stores; creates a national system of product identification


Designing Effective Packaging

Effective packaging considers: – Packaging of other brands in same product

category– Choice of packaging material and image it

projects– Environmental impact of packaging– Shape and color influences on image– Graphic information to be portrayed


Labeling Regulations

Federal Fair Packaging and Labeling Act of 1966: – Aims at making labels more helpful to

consumers by providing useful information

Food and Drug Administration:– Requires food labels to tell how much fat,

trans fat, saturated fat, cholesterol, calories, carbohydrates, protein, and vitamins are in each product serving


Organizing for Effective Product Management

Management of existing products– A single marketing manager typically handles

the entire marketing function in small firms– Larger firms may have a number of managers

who perform different functions• Brand managers • Product category managers • Market managers


Organizing for New-Product Development

Venture teams: – Specialists in different areas who work

together to focus on new-product development

“Skunk works”: – Small and isolated group in remote location

that functions with minimal supervision


Real People, Real Choices: Decision Made at Petters Group Worldwide

Tom chose option 3– Implementation: The Petters Group bought

Polaroid for $ 426 million. Production of instant film ceased in 2008. Digital cameras and digital picture frames were added to Polaroid’s existing line of DVD and LCD TVs

– Measuring success: Lower inventory costs and increased production efficiencies were realized


Keeping It Real: Fast-Forward to Next Class Decision Time at the 76ers

Meet Lara Price, Sr. VP of Business Operations for the Philadelphia 76ers

The 76ers are a professional basketball team within the NBA

The decision to be made: What method should be used to compile more detailed information about the customer base?


Copyright © 2009 Pearson Education, Inc. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice HallPublishing as Prentice Hall

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic,

mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.

chapter 9 manage the product. copyright 2009 pearson education, inc. publishing as prentice hall9-2...

Documents

product slide

product identity

different product objectives

product strategy objectives

successful product management

product life cycle

firms total product

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