Managing the Product

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Chapter 10

• Managing the Product

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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

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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 firms total product offering
  designed to satisfy a single need for target
  customers (e.g., PGs 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 firms 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

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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

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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

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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

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Branding Decisions

• A brand is a name, term, symbol, or any other
  unique element of a product that identifies one
  firms product(s) and sets it apart from
  competition
• Brands should
• be memorable
• have a positive connotation
• convey a certain image

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Brand Equity

• Brands 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