copyright 2000 prentice hall10-1 chapter 10 managing the product

Copyright 2000 Prentice Hall10-1

Chapter 10

Managing the Product


Steps in Managing Products (Fig. 10.1)


Objectives and Strategies for Individual Products

Strategies for Strategies for New New

ProductsProducts

Strategies for Strategies for New New

ProductsProducts

Strategies forStrategies forRegionalRegionalProductsProducts

Strategies forStrategies forRegionalRegionalProductsProducts

Strategies forStrategies forMatureMature

ProductsProducts

Strategies forStrategies forMatureMature

ProductsProducts


Objectives and Strategies for Multiple Products:

Product Line Strategies

A Product Line is a Firm’s Total Product Offering Designed to Satisfy a Single Need

JoyJoyIvoryIvory

AntibacterialAntibacterial

DawnDawn

SpecialCare

SpecialCare

Length of Product Line


Product Line ExtensionsProduct Line ExtensionsProduct Line ExtensionsProduct Line Extensions

StretchingStretching

Adding new items to line

FillingFilling

Adding sizes or styles

Downward

Upward

Product Line Strategies

Danger of Cannibalization

Contracting aContracting aProduct LineProduct Line

Dropping items

Contracting aContracting aProduct LineProduct Line

Dropping items

Two-way


Product Mix Strategies

Product Mix is the Total Set of all Products a Firm Offers for Sale

Beauty Products

Beauty Products

Health CareProducts

Health CareProducts

Laundry & Cleaning Products

Laundry & Cleaning Products

Width of Product Mix


Quality as a Product Objective

Ease of UseEase of Use

DurableDurableDegree of PleasureDegree of Pleasure

PrecisionPrecision

VersatileVersatileSatisfies NeedsSatisfies Needs

Focus on the Level and

Consistency of Quality

ReliableReliableProduct SafetyProduct Safety


Product Life Cycle (Fig. 10.3)


ProductProduct Single company produces productSingle company produces product

Introduction Stage of the PLC

GoalsGoals

SalesSales

ProfitsProfits

PricingPricing

MarketingMarketing

Get first-time buyers to try the productGet first-time buyers to try the product

Increase at a steady but slow paceIncrease at a steady but slow pace

NegativeNegative

High: recover R&D costs; or Low: attract large number of customers

High: recover R&D costs; or Low: attract large number of customers

Informing customersInforming customers

Length of StageLength of Stage Depends on 1) marketplace acceptance, 2) producer willingness to support

product

Depends on 1) marketplace acceptance, 2) producer willingness to support

product


SalesSales

ProfitsProfits

GoalsGoals

Marketing StrategiesMarketing Strategies

PricePrice

AdvertisingAdvertising

Rapid increase in sales Rapid increase in sales

Increase and peakIncrease and peak

Encourage brand loyaltyEncourage brand loyalty

Introduction of product variationsIntroduction of product variations

Price competition may appearPrice competition may appear

Heavy advertising is used when competitors appear

Heavy advertising is used when competitors appear

Growth Stage of the PLC


SalesSales

ProfitsProfits

CompetitionCompetition

ProductProduct

DistributionDistribution


Peak , then level off, even declinePeak , then level off, even decline

Margins narrowMargins narrow

Grows intenseGrows intense

Mostly replacement productsMostly replacement products

Sell through all suitable retailersSell through all suitable retailers

Firms alter the marketing mix, try to attract new users

Firms alter the marketing mix, try to attract new users

Maturity Stage of the PLC


SalesSales

ProfitsProfits

CompetitorsCompetitors

ProductProduct


Declining salesDeclining sales

Declining profitsDeclining profits

Large number with no one having the advantage

Large number with no one having the advantage

Should the product be kept?Should the product be kept?

Keep product, phase out gradually, drop product immediately

Keep product, phase out gradually, drop product immediately

Decline Stage of the PLC


Creating Product Identity: Branding Decisions

A Brand is a Name, a Term, a Symbol, or Any Other Unique Element of a Product

that Identifies One Firms’ Product(s) and Sets Them Apart From the

Competition.


Choosing a Brand Name, Mark, or Character

A good brand name must:– have a positive connotation & be memorable,– help maintain relationships with customers,– help position a product in consumer’s minds.

How does a firm select a good brand name? It must be:– easy to say, easy to spell, easy to read, and

easy to remember.


High CustomerLoyalty

High CustomerLoyalty

Perceived Quality

Perceived Quality

Brand NameAwareness

Brand NameAwareness

Brand Equity is a Brand’s Value to its Organization and Provides:

The Importance of Branding


Branding Strategies are a Major Part of

Product Decision Making

Branding Strategies are a Major Part of

Product Decision Making

Family/Umbrella BrandMultiple Items Under the

Same Brand Name

Family/Umbrella BrandMultiple Items Under the

Same Brand Name

Individual Brand Separate Unique Brand for

Each Product Item

Individual Brand Separate Unique Brand for

Each Product Item

Branding Strategies


Retailers Have Several Options When

Deciding What Brands to Sell

Retailers Have Several Options When

Deciding What Brands to Sell

Store BrandsPrivate Label Brands

Brands That Are Owned & Sold by a RetailerSam’s Cola

Store BrandsPrivate Label Brands

Brands That Are Owned & Sold by a RetailerSam’s Cola

Branding Strategies

National BrandsManufacturers’ Brands

Coca-Cola

National BrandsManufacturers’ Brands

Coca-Cola


Other Branding Strategies Licensing

– One firm sells another firm the right to use a brand name for a specific purpose and for a specific period of time.

– Example: Jurassic Park movie led to Jurassic Park candy, key chains & toys.

Co-Branding– Agreement

between two brands to work together in marketing a new product.

– Example: Oreo O’s Cereal


Provides ProductProvides ProductProtectionProtection

Provides ProductProvides ProductProtectionProtection

Facilitates ProductFacilitates ProductUse and StorageUse and Storage

Facilitates ProductFacilitates ProductUse and StorageUse and Storage

Supplies ImportantSupplies ImportantMarketing Marketing

CommunicationCommunication

Supplies ImportantSupplies ImportantMarketing Marketing

CommunicationCommunication

Functions ofFunctions ofPackagingPackaging

Functions ofFunctions ofPackagingPackaging

Packaging Functions


Product Category ManagersDevelops a Marketing Plan for all

the Brands and Products Within a Product Category

Product Category ManagersDevelops a Marketing Plan for all

the Brands and Products Within a Product Category

Market ManagersDevelops a Marketing Plan for

Products Sold to a Particular Customer Group

Market ManagersDevelops a Marketing Plan for

Products Sold to a Particular Customer Group

Brand ManagersTeam Leaders for a Single Brand

Responsible for Positioning the Brand &

Developing Brand Equity

Brand ManagersTeam Leaders for a Single Brand

Responsible for Positioning the Brand &

Developing Brand Equity

Management of Existing Products


Organizing for New Product Development

A Venture Team is a Group of People Within an Organization Who

Work Together Focusing on the Development of a New Product.

The Group Might Consist of People from Design, Engineering and

Marketing.


Chapter Summary Explain some of the different product objectives and

strategies a firm might choose. Explain how firms manage products throughout the

product life cycle (PLC). Discuss how branding creates product identity and

describe different types of branding strategies. Explain the important part packaging and labeling

play in developing effective product strategies. Describe how organizations are structured for new

and existing product management.

copyright 2000 prentice hall10-1 chapter 10 managing the product

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